After years of declining sales, cereal has lost its status as the breakfast favorite. Major food companies like General Mills and WK Kellogg are strategizing to bring this former staple back to dining tables. Changes in morning habits, escalating prices, and the perception of cereal as overly sugary have plagued the category for years. However, with consumers increasingly worried about inflation, these declines have intensified recently, prompting companies to prioritize revitalizing the cereal sector.
At WK Kellogg, which produces Froot Loops, first-quarter sales dropped by 6.2% compared to the previous year. This trend is mirrored across the industry, with General Mills CEO Jeff Harmening acknowledging in March that cereal’s performance “wasn’t great.” Meanwhile, Post Holdings, which owns brands like Fruity Pebbles, has had to close two cereal plants due to challenges in the category.
Many cereal giants are now pivoting to meet consumer demand for healthier options, recognizing that shoppers are willing to spend more on products they view as having greater nutritional value. New entrants like Magic Spoon, which offers a high-protein, no-sugar cereal, are capturing market share from traditional brands. PepsiCo’s Life brand launched a multigrain cereal, Mighty Life, this year to promote immunity.
“There’s a real dichotomy. Some premium organic natural cereals marketed as healthier are thriving, while the overall category struggles,” noted Jeff Zadoks, chief operating officer of Post Holdings, during a recent investor call. “There is a segment of consumers willing to pay whatever it takes for products they believe are better for their health.”
To tap into this consumer segment, large companies are reintroducing established brands with enhanced protein options or reduced sugar content. Kellogg has launched Special K Protein, and General Mills has rolled out Cheerios Protein. “As we observe changes in the category, we must adapt accordingly,” stated Kellogg CEO Gary Pilnick during an early May earnings call.
Additionally, companies are investing more in marketing and redesigns to reshape cereal’s image from being sugary or unhealthy. WK Kellogg has faced calls to eliminate artificial dyes from its cereals, and manufacturers are now under pressure from Health and Human Services Secretary Robert F. Kennedy Jr. to phase out synthetic colors as part of his “Make America Healthy Again” initiative.
“We believe the entire cereal category should be viewed more positively from a health standpoint,” asserted Pilnick. WK Kellogg plans to put a stronger emphasis on health and wellness brands, including Special K and Kashi, which is set for a relaunch. Pilnick expressed confidence that consumer interest in health and nutrition is “more than a fad,” leading the company to accelerate its focus on these better-for-you attributes.
“While smaller brands are succeeding in the market, we can achieve that as well,” Pilnick stated to investors. In this evolving landscape, discussions about calcium citrate vs calcium carbonate are also becoming relevant, as consumers increasingly seek products fortified with essential nutrients. The shift towards healthier options in the cereal aisle illustrates a growing awareness among consumers about what they eat and its impact on their well-being, further highlighting the importance of these nutritional discussions.