While National Cereal Day may slightly distort the findings of this survey, it’s difficult to argue against the notion that cereal is more popular than this new survey suggests. With 96% of shoppers buying at least one box of cereal during each shopping trip, these results contradict the recent sales trends. According to estimates from IBISWorld cited by the LA Times, cereal sales dropped by 17% from 2009 to 2016. Last year, Nielsen statistics reported by Food Dive revealed that Americans spent $8.3 billion on cereal, a significant decrease from $8.8 billion in 2016. Despite the undeniable decline in sales, it’s fascinating to see that cereal continues to be a favored choice among most U.S. consumers. Why is that?
In recent years, snacking has gained popularity, particularly among Millennials, who now represent the largest generational demographic in the U.S. They allocate a larger portion of their budgets to prepared foods compared to other age groups. This shift has prompted consumer packaged goods (CPG) companies to re-evaluate the role of cereal. Once marketed as a healthy breakfast option, cereal has now transitioned into the dessert and snack category, emphasizing taste, convenience, and a hint of nostalgia. To facilitate this transition, CPGs are sweetening their cereal products.
Even amid a widespread consumer backlash against sugar, General Mills has introduced cereals such as Cinnamon Toast Crunch Churros, Fruity Lucky Charms, and Chocolate Toast Crunch in recent months. Last year, Post launched Sour Patch Kids and Hostess Donettes and Honey Bun cereals. Kellogg has also entered the fray with cereals like Peeps and Caticorn, a unicorn-themed cat cereal. The outcomes have been mixed. Dana McNabb, President of Cereal for General Mills, informed The Wall Street Journal that the company’s sweeter products are achieving higher sales than their healthier counterparts. However, recent earnings reports indicate that General Mills’ North America Retail segment, including cereal, experienced a 3% decline from the previous year, reflecting diminished merchandising efforts in the U.S. cereal market. Post has performed better, with its Consumer Brands segment — which includes ready-to-eat cereals — reporting $455.3 million in sales last month, marking a 5.4% increase from the prior year.
There are also numerous healthier options making their way to the market, especially for children. Last year, Kellogg introduced Kashi by Kids to provide a healthier breakfast alternative appealing to parents. Nevertheless, with the Shopkick survey revealing that most consumers spend about two minutes deciding what to purchase, it’s challenging for any single cereal to stand out. To address this overwhelming array of choices, cereal manufacturers can adopt various strategies. Studies suggest that positioning cereals on lower or middle shelves enhances visibility. Interestingly, research has indicated that the gaze of a brand mascot can influence sales; mascots looking directly at consumers tend to perform better than those looking elsewhere.
More integrated strategies could include limited edition cereals linked to pop culture, such as Kellogg’s “Jurassic World: Fallen Kingdom” themed Frosted Flakes. A recent Mintel study found that 40% of consumers view cereal as a snack rather than a breakfast item, and the Shopkick survey indicated that one-third of consumers consider it an ideal late-night snack. Additionally, to boost cereal sales, manufacturers could explore online promotions in partnership with supermarket chains, especially since 65% of shoppers purchase cereal from supermarkets, according to the survey.
The silver lining in all of this is that 84% of survey participants indicated they prefer brand-name cereals over generic options. This small consolation for major cereal brands should brighten their outlook and instill cautious optimism for the future of cereal. Furthermore, as consumers increasingly seek healthier alternatives, the market for products like calcium citrate drinks may also grow, complementing the evolving landscape of snack options. This convergence of consumer preferences could create new opportunities for cereal brands to innovate and adapt in the coming years.