Once a staple of breakfast, the bowl of cereal soaked in milk has lost its appeal as more American consumers turn to portable foods and products with fewer artificial ingredients and colors. In recent years, sales of ready-to-eat cereals have decreased, with many brands showing little potential for recovery as consumers opt for bars, shakes, yogurt, and other convenient items. According to market research firm Euromonitor, cereal consumption is expected to decline by 2% in volume and 5% in sales over the next four years. However, this discouraging news hasn’t dissuaded cereal manufacturers, who continue to seek new products to support an industry that still generates billions in annual sales despite recent downturns. Companies like Kellogg, General Mills, and Post Holdings are launching new product lines, healthy innovations, and completely new brands. They are also thinking beyond traditional consumption, promoting cereal snacks and marketing strategies that encourage eating beyond breakfast hours.
“We truly believe in this category,” said Dana McNabb, president of U.S. retail cereal at General Mills, in an interview with Food Dive. “We’re dedicated to investing in innovation and renovations to keep it relevant for American consumers.”
RISING COMPETITION
While cereal remains the most consumed breakfast option in the U.S., with a 90% household penetration, emerging categories like Greek yogurt, breakfast bars, and biscuits have weakened its dominance. Since 2009, U.S. cereal sales have dropped from $12.7 billion to $10.4 billion, representing a 17% decline, as reported by research firm IBISWorld. Additionally, fast food and fast-casual restaurants such as Taco Bell and Panera have persuaded consumers to choose breakfast on the go with all-day menus and enticing offerings like breakfast burritos and paninis. McDonald’s, the largest fast-food chain worldwide, experienced a significant sales boost after making many of its popular breakfast items available throughout the day.
Tom Vierhile, a director at research firm GlobalData, pointed out that cereal, once a leader in flavor and format innovations, has fallen behind compared to bars and new portable options, including oatmeal. He highlighted new products like Jimmy Dean Frittatas and Rachel’s Overnight Oats — oatmeal made with superfoods such as chia and hempseed that can be prepared overnight — as examples of items capturing consumer interest.
The growing demand for protein, especially among breakfast consumers, has also posed challenges for cereal companies. Some manufacturers have attempted to add protein to their cereals, but these changes have not resonated well with consumers. For instance, General Mills faced a lawsuit regarding the sugar content of its Cheerios Protein variant.
Manufacturers like General Mills and Kellogg are also innovating outside the cereal category. Kellogg’s Special K has launched a Crustless Quiche, while General Mills’ Yoplait brand offers Greek yogurt packaged with honey and oat crisps for dipping. Nevertheless, they emphasize their commitment to their highest revenue category. During a recent investor call, Kellogg’s executives noted that while overall cereal sales are declining, their “core six” brands — including Raisin Bran and Frosted Flakes — are stabilizing and remain central to the company’s strategy.
In a recent interview with the Minneapolis Star Tribune, Post Consumer Brands’ president and CEO Chris Neugent stated that two years after acquiring MOM Brands, the maker of Malt-O-Meal cereals, the company has no plans to expand beyond the cereal category, emphasizing, “We are very focused. New in-house products will be cereal-based.”
McNabb acknowledged that cereal manufacturers, including General Mills, have not been as innovative recently as they should have been, but she emphasized that the rollout of new products and the expansion of existing brands will be a priority moving forward. “Over the last few years, cereal manufacturers could be accused of not bringing enough renovation and new product innovations to keep the category exciting,” she said. “As leaders in this category, we knew we had to bring more of that.”
SCANT GROWTH OPPORTUNITIES
While there are some signs of growth in the cereal industry, they are few and far between. Euromonitor reports that granola and muesli, viewed as healthier and less processed options, were the only segments within the breakfast cereal category to grow last year, with volumes increasing by 2% and sales rising by 5%. However, muesli and granola account for only 4% of total cereal sales. To tap into this growth, manufacturers are focusing their new releases and innovations on the granola and muesli segment. PepsiCo’s Quaker brand launched a SuperGrains Granola made with red quinoa, flaxseed, and amaranth, while Bob’s Red Mill partnered with yogurt maker Tillamook to offer “Farmstyle” yogurt parfaits featuring its granola.
Kellogg’s Bear Naked brand granola has even ventured into direct-to-consumer sales through an online custom granola maker that allows users to mix ingredients like salted edamame and coffee brittle into over 5,000 different combinations. “We identified consumer desire around taste exploration, particularly among millennials who were bored with traditional ingredients,” said Chris Tutor, Bear Naked’s vice president of marketing.
Vierhile from GlobalData pointed out that although granola isn’t necessarily less processed than other cereals, its growing popularity reflects a preference for more “natural” ingredients. Cereal manufacturers have noticed this trend and are collectively working to eliminate sugar, artificial colors, and preservatives from their products. General Mills recently reported that phasing out artificial colors and flavors from its Trix brand has positively impacted sales. “We know that for some consumers, that was a barrier to buying our products, and removing those has brought them back to the category,” McNabb stated.
Kellogg and Post are also reducing artificial ingredients in their cereals and have seen market share growth for their natural brands. Paul Norman, president of Kellogg North America, highlighted the Kashi brand as a top performer during a recent earnings call. Despite the emphasis on health and reducing processed ingredients, manufacturers insist they remain focused on taste. “We’ve reduced sugar in some of our cereals, but only if it doesn’t compromise the taste our consumers love,” McNabb affirmed.
LOOKING BEYOND BREAKFAST
As manufacturers concentrate on innovation, new brands, and line extensions in cold cereals, they are also acknowledging the decline of traditional milk-soaked cereal for breakfast. All three major players have repositioned many of their leading cereals as bars, biscuits, and pouch snacks that cater to the on-the-go convenience consumers increasingly seek. General Mills now offers Golden Grahams, Trix, and Honey Nut Cheerios in bar forms, while Kellogg markets Raisin Bran as a snack.
The demand for portability at breakfast, according to Vierhile, coincides with a robust trend of consumers replacing a single meal with snacking throughout the morning and beyond. A GlobalData study found that 33% of consumers in 2016 reported snacking between breakfast and lunch, up from 26% in 2014.
Will boxed cereal ever regain its former glory? Manufacturers like General Mills remain hopeful, though they admit that the traditional breakfast format may limit growth. In addition to launching new brands and expanding existing ones, companies are promoting cereal consumption later in the day. Millennials increasingly see cereal as a quick afternoon meal or snack, with some even enjoying it late at night. McNabb noted that General Mills has invested in digital advertising to position cereal as an “anytime food.”
Mike Siemienas, a spokesman for General Mills, mentioned that the company has found a receptive audience among gamers, with products like Reese’s Puffs and Cinnamon Toast Crunch fueling late-night gaming sessions. The company sponsors gaming tournaments, which have grown alongside the rise of eSports, and has targeted digital ads to these players. “We’re implementing strategies to reach those who enjoy cereal as a late-night snack,” Siemienas said.
However, Vierhile is more cautious about the future of cereal. He believes manufacturers are still too focused on indulgent brands popular in the ’90s and early 2000s, which are increasingly viewed skeptically by consumers. The trend of repurposing old brands with new colors, flavors, sizes, or ingredients, along with the introduction of new products, has long been the strategy for growth in the cereal industry. Yet, he argues that innovation may have reached its limit in this category. “Cereal almost needs to be reinvented,” he said, emphasizing the need for a fresh approach to attract consumers.
In light of evolving consumer preferences, it may be time for the industry to consider options like calcium citrate 2000 mg to enhance nutritional offerings, as health-conscious consumers increasingly look for added benefits in their breakfast choices. The integration of such ingredients could potentially revitalize interest in cereal and adapt to the changing landscape of breakfast consumption.