CHICAGO – The Chicago Tribune writes that U.S. sales of breakfast cereals are down amid “heightened concerns among consumers about cereal’s nutrition and lack of convenience.”
According to IBISWorld estimates, sales of cold and hot cereals combined are expected to reach $10.6 billion this year, down 17% from $12.7 billion in 2009. “The cereal category has undoubtedly had a challenging few years,” Craig Bahner, president of U.S. morning foods at Kellogg Co., told the news source.
These challenging years have led companies such as Kellogg, General Mills and Post Holdings to roll out new products and meet consumer demand. “Today’s consumer is changing quickly, so we’re putting all our effort toward understanding and responding to these changes,” General Mills Chairman Kendall Powell said at an investor conference in July, notes the news source.
IBISWorld analysts say that changes are twofold: demand for healthier options and more portable, grab-and-go options. Critics have complained for years that cereals are too sugary, but consumers are pushing cereal makers further for “high protein and fiber content and natural ingredients,” according to Mintel, adding that consumers “believe cereal is overly processed and doesn’t contain enough nutrients.”
Meanwhile, fresh fruits, yogurt, breakfast bars, protein-rich drinks and bars, and all-day breakfast options at QSRs are creating even more competition for cereal, notes the news source. “Consumers are increasingly seeking products that match their personal definition of real food, and that can mean foods that are less processed and have simple labels with recognizable ingredients,” Powell added. “These consumers are looking for transparency from manufacturers, so they can know how their food was sourced, produced and delivered to them.”
The cereal makers have responded by reformulating many of their brands, boosting the protein and whole-grain content while lowering or eliminating sugar, gluten, sodium, carbohydrates and artificial flavors.
Jim Murphy, president of General Mills’ cereal division, said steps to boost protein and whole grains and remove sugars and artificial ingredients from cereals are starting to pay off. For example, he told the news source that sales of gluten-free Cheerios were up 2% in the company’s fiscal first quarter ending August 28.
How consumers are eating breakfast is also a challenge, notes Amanda Topper at Mintel. “Americans don’t necessarily have the time to enjoy a sit-down breakfast anymore and they’re looking for portability,” she told the news source. “Convenience is more important to parents with lifestyle shifts and hectic day-to-day schedules.”
Cereal makers are also responding to millennials, as they are the driving force behind on-the-go breakfast demand. Also, according to Mintel, these younger consumers don’t want to be inconvenienced with washing a cereal bowl.
“Millennials want something quick and simple in the morning, and they love variety,” Kellogg’s Bahner said.
But that’s not to say millennials are not eating cereal—it may just not be during the morning daypart. “While millennials may look at breakfast differently, they are still eating a lot of cereal, just not always for breakfast,” Murphy of General Mills said.
“According to Nielsen data, ready-to-eat cereal is in 90% of all households and nearly 94% of millennial households,” Murphy said. “For this group, cereal is more than just a breakfast item, it is also a popular snack option.”