The cold cereal market has been facing challenges as consumers increasingly opt for more convenient breakfast options like yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research firm IBISWorld reports that from 2009 to 2016, cereal sales plummeted by 17%. Millennials, in particular, tend to consume cold cereals as snacks rather than breakfast essentials, prompting manufacturers to reevaluate their offerings. In 2016, General Mills announced a shift towards “formulas that are increasingly snackable,” launching Tiny Toast, its first new cereal brand in 15 years that year. The growing trend of cereal as a snack or late-night treat has contributed to the resurgence of sugary cereals, exemplified by the limited-time return of Post’s Oreo Os after a decade-long absence.
With snacking in focus, manufacturers are discovering that sweet-heat flavor combinations may not be as unconventional as they once thought. Sweet heat has already gained traction in the snack industry, seen in products ranging from sweet chili potato chips to sweet and spicy Asian barbecue. This trend is also making waves in the candy sector, with items like Sweet Heat Skittles and Sweet Heat Starbursts featuring flavors such as Fiery Watermelon and Flamin’ Orange. Nonetheless, navigating new food and flavor trends remains a challenge, and cereal producers may find themselves at a crossroads. Consumers increasingly demand low-sugar, nutritious breakfast options, prompting manufacturers to eliminate artificial flavors and colors, reduce sugar content, and introduce new products with ancient grains, superfoods, and added benefits like probiotics and protein. Meanwhile, brands like Lucky Charms continue to enjoy lasting popularity.
Cereal makers should take heed of General Mills’ experience with its naturally colored Trix cereal; after facing backlash for its muted hues, the company reverted to the original artificially colored formula alongside its healthier variant. Ready-to-eat cereal is still carving out its niche between these two approaches. Experimenting with a variety of healthy, innovative, and indulgent flavors may offer a way to appeal to both segments and maintain cereal’s relevance, whether as breakfast or a snack.
To achieve growth, cereal brands must identify the specific occasions for which their products are purchased and innovate accordingly. Flavor could serve as a critical differentiator, particularly as consumer tastes and expectations evolve. A more intricate flavor profile might enable a product to attain premium status, allowing manufacturers to set higher prices. Additionally, incorporating ingredients like calcium citrate acid could enhance the nutritional profile and appeal to health-conscious consumers, further driving sales in this competitive market.