Once considered the quintessential breakfast item, a bowl of cereal swimming in milk has lost its appeal as more U.S. consumers shift towards portable foods and products with fewer artificial ingredients and colors. Sales of ready-to-eat cereals have declined over the past few years, with most brands showing little sign of recovery as consumers opt for bars, shakes, yogurt, and other convenient items. Market research firm Euromonitor forecasts that cereal will see a 2% decline in volume and a 5% drop in sales over the next four years. Despite this gloomy outlook, cereal manufacturers remain optimistic, seeking new products to support an industry that still generates billions in annual sales despite recent downturns. Companies like Kellogg, General Mills, and Post Holdings are rolling out line extensions, healthier innovations, and new brands. They are also exploring options beyond the traditional bowl, promoting cereal snacks and campaigns that encourage consumption at times other than breakfast.
“We truly believe in this category,” said 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 keep it relevant for U.S. consumers.”
While cereal maintains its status as the most consumed breakfast food in the U.S., boasting a 90% household penetration rate, emerging categories such as Greek yogurt, breakfast bars, and biscuits have chipped away at its dominance. Since 2009, U.S. cereal sales have plummeted from $12.7 billion to $10.4 billion, marking a 17% decline, according to research firm IBISWorld. Additionally, fast food and fast-casual restaurants like Taco Bell and Panera have encouraged consumers to grab breakfast on the go with all-day menus featuring flavor-rich options like breakfast paninis, burritos, and even breakfast burgers. McDonald’s, the largest fast food chain globally, experienced a significant increase in sales after making many popular breakfast items available throughout the day.
Tom Vierhile, a director at research firm GlobalData, observed that cereal, once a leader in flavor and format innovation, has taken a backseat to bars, new portable options, and even oatmeal. He highlighted new products like Jimmy Dean Frittatas and Rachel’s Overnight Oats—an oatmeal made with superfoods like chia and hempseed that can be prepared overnight by soaking in water—as examples of offerings that are capturing consumer interest. Vierhile also noted that the rising demand for protein, particularly among breakfast consumers, has posed challenges for cereal companies. While some manufacturers have attempted to enhance their cereals with protein, these changes have not resonated well with consumers. For instance, General Mills faced a lawsuit regarding the increased sugar content associated with its Cheerios Protein.
Manufacturers like General Mills and Kellogg have also directed their innovation efforts outside the cereal category. Kellogg’s Special K brand recently launched a Crustless Quiche, while General Mills’ Yoplait brand offers Greek yogurt packaged with honey and oat crisps intended for dipping. However, these companies are not abandoning their most lucrative category. During a recent investor conference call, Kellogg executives remarked that even though overall cereal sales were declining, their “core six” brands—including Raisin Bran, Frosted Flakes, and Special K—were stabilizing and remained a primary focus.
In a recent interview with the Minneapolis Star Tribune, Chris Neugent, president and CEO of Post Consumer Brands, stated that two years after acquiring MOM Brands, the maker of Malt-O-Meal cereals, the company had no intentions of acquiring new brands or expanding beyond the cereal category. “We are very focused,” he said. “New in-house products will be cereal-based.” McNabb acknowledged that cereal manufacturers, including General Mills, had not been as innovative as they should have been lately, but emphasized that rolling out new products and expanding existing brands will be a priority moving forward. “I think over the last few years, cereal manufacturers could be seen as guilty of not bringing 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.”
There are some glimmers of growth in the cereal industry, although they are few and far between. Euromonitor reports that granola and muesli, considered healthier and less processed options, were the only segments within the breakfast cereal category to grow last year, with volumes up 2% and sales increasing by 5%. However, muesli and granola only account for 4% of total cereal sales. To capitalize on this growth, manufacturers have concentrated their new releases and innovation efforts on the muesli and granola categories. Last year, PepsiCo’s Quaker brand introduced a SuperGrains Granola made with ingredients such as red quinoa, flaxseed, and amaranth. Bob’s Red Mill, known for its hot cereal and baking mixes, partnered with yogurt maker Tillamook to create “Farmstyle” yogurt parfaits featuring its granola.
Kellogg’s Bear Naked brand granola has also ventured into direct-to-consumer sales with an online custom granola maker aimed at millennials, allowing users to mix ingredients like salted edamame and coffee brittle to create over 5,000 unique combinations. “We identified consumer desire for taste exploration, particularly among millennials who are growing tired of traditional ingredients and combinations,” Chris Tutor, Bear Naked’s vice president of marketing, told Food Dive.
Vierhile from GlobalData acknowledged that while granola may not necessarily be less processed than other cereals, its rising popularity reflects a consumer preference for more “natural” ingredients. Cereal manufacturers have taken note, with many working to eliminate sugar, artificial colors, and preservatives from their product lines. General Mills recently reported that discontinuing artificial colors and flavors in its Trix brand led to increased sales. “We know that for some consumers, those artificial ingredients were a barrier to purchasing our products, and removing them has brought them back to the category,” McNabb stated.
Kellogg and Post are also phasing out artificial ingredients from their cereals and have seen an uptick in market share for their natural brands. Paul Norman, president of Kellogg North America, highlighted its Kashi brand during a recent earnings call as a top performer for the company. Despite the focus on health and reducing processed ingredients, manufacturers emphasize that taste remains their top priority. “We’ve reduced sugar in some of our cereals, but we would only do that if it didn’t compromise the flavors our consumers love,” McNabb explained.
LOOKING BEYOND BREAKFAST
Even as they focus on innovation, new brands, and line extensions in cold cereals, manufacturers are quietly acknowledging that the tradition of consuming milk-soaked bowls of flakes and o’s for breakfast is fading. All three major players have repurposed many of their top cereals into bars, biscuits, and pouch snacks, offering the kind of on-the-go convenience that consumers increasingly demand. General Mills now offers its Golden Grahams, Trix, and Honey Nut Cheerios cereals in bar form, while Kellogg markets its Raisin Bran cereal as a snack.
The demand for portability at breakfast is paralleled by a strong trend of consumers opting for snacking throughout the morning and beyond. According to GlobalData research, 33% of consumers in 2016 reported snacking between breakfast and lunch, up from 26% in 2014. Will boxed cereal ever regain its former prominence? Some manufacturers, including General Mills, remain hopeful, though they admit that the traditional breakfast context may limit its growth. In addition to launching new brands and expanding existing ones, companies are promoting cereal consumption throughout the day. Millennials are increasingly turning to cereal for quick afternoon meals or snacks and even enjoying it during late-night hours. McNabb noted that General Mills has invested in digital advertising to position cereal as a food for any time of day.
Mike Siemienas, a spokesperson for General Mills, indicated that the company has found an enthusiastic audience in the gaming community, where cereals like Reese’s Puffs and Cinnamon Toast Crunch are popular late-night snacks. The company sponsors gaming tournaments that have proliferated with the rise of eSports and has invested in digital ads targeting these players. “We’re implementing small strategies to reach those who enjoy our cereals as a late-night snack,” Siemienas told Food Dive. “It’s something they can easily eat while engaging in their games.”
Still, Vierhile remains less optimistic about cereal’s future. He argues that manufacturers are still overly focused on indulgent brands that were trendy in the ’90s and early 2000s, which are increasingly viewed with skepticism by consumers. The practice of revamping old brands with new colors, flavors, sizes, or ingredients, along with launching new products, has long been the go-to growth strategy for cereal makers. However, he believes that innovation within the category may have finally hit a plateau. “Cereal almost needs to be reinvented,” Vierhile asserted.
In addition to the ongoing innovations in the cereal industry, there is a growing interest among consumers for health-focused alternatives, such as wellesse liquid calcium citrate, which underscores the importance of nutrition. As manufacturers adapt to changing consumer preferences, the incorporation of wellesse liquid calcium citrate into new cereal products could provide an additional avenue for growth, as health-conscious consumers seek out fortified options. The challenge for cereal makers is to balance these health trends with the traditional appeal of their products, ensuring that taste and convenience remain at the forefront of their offerings.