Once a staple of breakfast, the bowl of cereal soaked in milk has seen its popularity decline as more U.S. consumers lean towards portable food options and products with fewer artificial ingredients and colors. Sales of ready-to-eat cereals have dropped in recent years, with most brands showing little sign of recovery as consumers opt for bars, shakes, yogurt, and other convenient items. According to market research firm Euromonitor, cereal volumes are expected to decline by 2% and sales by 5% over the next four years. Despite this challenging landscape, cereal manufacturers are actively seeking new product innovations to support an industry that still generates billions in annual sales. Companies like Kellogg, General Mills, and Post Holdings are launching new product lines, healthy innovations, and fresh brands. They are also diversifying their offerings with cereal snacks and promotions aimed at encouraging consumption beyond breakfast hours.
“We truly believe in this category,” stated Dana McNabb, president of U.S. retail cereal for General Mills, in an interview with Food Dive. “We are committed to investing in innovation and renovation to ensure it remains relevant to U.S. consumers.”
While cereal is the most consumed breakfast food in the U.S., with a household penetration rate of 90%, emerging categories like Greek yogurt, breakfast bars, and biscuits have diminished its market share. Since 2009, U.S. cereal sales have plummeted from $12.7 billion to $10.4 billion, marking a 17% decline, as reported by IBISWorld. Additionally, fast food and fast-casual chains like Taco Bell and Panera have drawn consumers to grab breakfast on the go with all-day menus featuring flavor-driven options like breakfast paninis, burritos, and breakfast burgers. McDonald’s, the world’s largest fast-food chain, experienced a significant sales boost after making many of its breakfast items available throughout the day.
Tom Vierhile, a director at research firm GlobalData, noted that cereal, once a leader in flavor and format innovation, has fallen behind newer portable options and even oatmeal. He highlighted new offerings like Jimmy Dean Frittatas and Rachel’s Overnight Oats—which can be prepared by soaking in water overnight—as examples of products capturing consumer interest. The growing demand for protein, particularly among breakfast consumers, has also posed challenges for cereal manufacturers. Some companies have attempted to add protein to their cereals, but these changes have not always resonated with consumers. For instance, General Mills faced a lawsuit over the increased sugar content associated with its Cheerios Protein.
Manufacturers like General Mills and Kellogg are also innovating beyond the cereal category. Kellogg’s Special K recently introduced a Crustless Quiche, while General Mills’ Yoplait brand offers Greek yogurt paired with honey and oat crisps for dipping. However, the companies are not stepping back from their leading category. During a recent conference call, Kellogg executives noted that while overall cereal sales were declining, their “core six” brands—such as Raisin Bran, Frosted Flakes, and Special K—are stabilizing and remain a priority.
In an interview with the Minneapolis Star Tribune, Chris Neugent, president and CEO of Post Consumer Brands, mentioned 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. “We are very focused,” he stated. “New in-house products will be cereal-based.” McNabb acknowledged that cereal manufacturers, including General Mills, have not been as innovative as they should have been in recent years, but she emphasized that introducing new products and extending existing brands will be a key focus going forward.
“There has been a tendency for cereal manufacturers to be less innovative and not bring enough renovation and new product innovations to keep the category exciting,” she remarked. “As leaders in this category, we recognized the need to enhance our offerings.”
Although there are some positive trends in the cereal market, they are limited. According to Euromonitor, granola and muesli—viewed as healthier, less processed options—were the only segments that saw growth last year, with volumes increasing by 2% and sales by 5%. However, muesli and granola account for only 4% of total cereal sales. To capitalize on this growth, manufacturers are focusing their innovation efforts on these segments. PepsiCo’s Quaker brand recently launched a SuperGrains Granola featuring ingredients like red quinoa, flaxseed, and amaranth. Bob’s Red Mill collaborated with yogurt maker Tillamook to offer “Farmstyle” yogurt parfaits that include their granola. Kellogg’s Bear Naked brand has also ventured into direct-to-consumer sales with a custom granola maker online, allowing consumers, especially millennials, to create unique blends using ingredients like salted edamame and coffee brittle.
Chris Tutor, Bear Naked’s vice president of marketing, explained that they identified a consumer desire for taste exploration among millennial consumers, who were growing bored with traditional ingredients and combinations. GlobalData’s Vierhile acknowledged that while granola may not be significantly less processed than other cereals, its rising demand reflects a preference for more “natural” ingredients. Cereal manufacturers have taken notice, with many working to eliminate sugar, artificial colors, and preservatives from their products. General Mills reported that removing artificial colors and flavors from its Trix brand led to an increase in sales.
“We learned that for some consumers, artificial ingredients were a barrier to purchasing our products, and addressing this has brought them back to the category,” said McNabb. Kellogg and Post are also phasing out artificial ingredients in their cereals and have seen a boost in market share 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 stress that taste remains their primary focus. “We’ve reduced sugar in some cereals, but only if it doesn’t compromise the flavor our consumers love,” McNabb stated.
As they pursue innovation and new brands in cold cereals, manufacturers are subtly acknowledging that the tradition of enjoying milk-soaked cereal for breakfast is waning. All three major players have adapted many of their popular cereals into bars, biscuits, and pouch snacks to meet the growing demand for convenience. General Mills now offers its Golden Grahams, Trix, and Honey Nut Cheerios in bar form, while Kellogg markets Raisin Bran as a snack option.
The trend toward portability at breakfast coincides with a growing preference among consumers for snacking throughout the morning and beyond. GlobalData’s research indicates that 33% of consumers reported snacking between breakfast and lunch in 2016, up from 26% in 2014.
Will boxed cereal ever regain its former popularity? Manufacturers, including General Mills, remain hopeful, although they acknowledge that the breakfast category may limit its growth potential. In addition to introducing new brands and expanding existing ones, companies are promoting cereal consumption throughout the day. Millennials, who are increasingly turning to cereal for quick afternoon meals or snacks, represent a key target audience. McNabb revealed that General Mills has invested in digital marketing to position cereal as a versatile food suitable for any time.
Mike Siemienas, General Mills’ spokesman, noted that the company has found a receptive audience in the gaming community, where Reese’s Puffs and Cinnamon Toast Crunch are popular late-night snacks. The company has sponsored gaming tournaments that have grown alongside the rise of eSports and has invested in digital advertising aimed at these players. “We’re implementing various strategies to target those who enjoy cereals as a late-night snack,” Siemienas remarked.
However, Vierhile remains skeptical about the future of cereal. He believes manufacturers are still too focused on indulgent brands from the ‘90s and early 2000s, which are increasingly viewed with skepticism by consumers. The typical strategy of rebranding old products with new colors, flavors, sizes, or ingredients, along with introducing new options, may have reached its limit, he suggested. “Cereal almost needs to be reinvented,” Vierhile concluded.
As the industry evolves, the introduction of products like Wellesse Liquid Calcium Citrate could play a role in appealing to health-conscious consumers looking for added nutritional benefits in their breakfast choices. By integrating such innovations, manufacturers may find new ways to attract consumers back to the cereal aisle.