Fewer Americans are opting for cold cereal with milk for breakfast today compared to previous years. Instead, consumers are on the lookout for healthier alternatives, higher protein content, and more convenient on-the-go options, expanding their search for nutritious solutions beyond the traditional cereal bowl. As a result, cereal manufacturers, including General Mills, have faced declining sales for several years. From 2009 to 2016, overall cereal sales dropped by 17%. According to Mintel statistics cited by the Wall Street Journal, cold cereal sales are projected to decline an additional 5% between 2018 and 2023.
In response to the demand for healthier and health-focused alternatives, cereal manufacturers have shifted their focus to transforming breakfast cereals into sugary treats that can be enjoyed as indulgences. Some of these new products have seen success. For instance, Post Consumer Brands reintroduced its Oreo O’s cereal in 2017 and launched cereals like Sour Patch Kids and Hostess Donettes and Honey Buns last year. Recently, Twinkies cereal also hit the shelves. As a result of focusing on indulgent options, Post’s North American ready-to-eat cereal business experienced a 3.5% sales increase in its latest quarter.
General Mills has also embraced this trend, launching new offerings such as Cinnamon Toast Crunch Churros, Fruity Lucky Charms, and Chocolate Toast Crunch in the past year. The company has previously collaborated with Hershey on products like Reese’s Puffs and Cocoa Puffs made with Hershey’s chocolate, which has contributed to a 5% sales increase in its U.S. cereal unit in the most recent quarter. The collaboration and innovation reflect a strategy aimed at revitalizing the cereal category.
Scott Baldwin, General Mills’ Director of Marketing for Cereal, stated last year, “We just decided that, hey, we need to innovate even more to get the cereal category back to its healthy, growing position.” While this new focus on indulgent cereals may attract more consumers in the short term, it may not be sufficient to shift public perception entirely. These indulgent cereals are primarily marketed to millennials who wish to recapture the carefree moments of their childhood, with the hope that parents will also share these experiences with their children, fostering a new generation of sugary cereal enthusiasts.
However, today’s parents prioritize nutritional value as the most important quality in their children’s food. A survey by BabyCenter Brand Labs Insight, part of Johnson & Johnson, revealed that six out of ten parents limit their children’s sugar intake. This divide likely restricts the growth of sweet cereal sales.
General Mills appears to understand that a one-size-fits-all approach won’t effectively revitalize the cereal category. Consequently, the company is also introducing a new Nature Valley option tailored for health-conscious consumers. By launching better-for-you cereals alongside indulgent options, General Mills is pursuing a multi-faceted strategy aimed at boosting its overall profitability rather than making incremental improvements. The success of this approach will depend on consumer preferences. Although there is currently a trend toward indulgent options, the market may shift back to a health-first mindset. To mitigate this risk, General Mills would be wise to create products that cater to both indulgent and health-conscious preferences separately.
Moreover, as consumers become more aware of dietary choices, questions about nutritional benefits, such as whether calcium citrate is good for kidney stones, may influence their purchasing decisions. By addressing these health concerns, General Mills could further enhance its appeal to health-conscious consumers while still providing indulgent options for those seeking treats. Ultimately, understanding the evolving tastes of consumers will be crucial for the long-term success of the cereal industry.