The cold cereal market has been facing challenges as consumers shift towards more convenient breakfast alternatives, such as yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research firm IBISWorld reports that cereal sales fell by 17% from 2009 to 2016. Notably, Millennial consumers tend to view cold cereals more as snack foods than breakfast essentials, prompting manufacturers to reevaluate their strategies. In response, General Mills announced in 2016 that it would concentrate on developing snackable formulas, subsequently launching Tiny Toast, its first new cereal brand in 15 years. This shift towards cereals as snacks or late-night treats has led to a revival of sugary options, including Post’s Oreo Os, which made a limited-time return after a decade-long hiatus.
With snacking trends in mind, manufacturers may discover that sweet-heat flavor combinations are more viable than they initially seem. This flavor pairing has already gained traction in the snack industry, featuring products like sweet chili potato chips and sweet and spicy Asian barbecue. It has also emerged in the candy sector with offerings such as Sweet Heat Skittles and Sweet Heat Starbursts, showcasing flavors like Fiery Watermelon and Flamin’ Orange. However, navigating new food and flavor trends can be challenging, leaving cereal makers in a precarious position. Consumers express a desire for low-sugar, highly nutritious breakfast options. In response, manufacturers are eliminating artificial flavors and colors, reducing sugar content, and developing new products that incorporate ancient grains, superfoods, and nutritional enhancements like probiotics and calcium citrate.
Despite these changes, brands like Lucky Charms continue to enjoy lasting popularity. Manufacturers should also consider the cautionary experience of General Mills with its naturally colored Trix cereal. After consumers criticized the new product for its subdued colors, labeling them as “depressing,” General Mills reverted to its original, artificially colored formula while maintaining a better-for-you version.
Ready-to-eat cereal is still carving out its niche between these two trends. Experimenting with a variety of healthy, innovative, and indulgent flavors may be key to remaining relevant, whether consumed at breakfast or as a snack. For cereal brands, the path to growth lies in understanding the specific occasions for which their products are purchased and innovating accordingly. Flavor could serve as a significant differentiator, especially as consumer tastes and expectations become increasingly sophisticated. A more complex flavor profile may enable a product to achieve premium positioning, allowing manufacturers to justify higher prices. Additionally, incorporating ingredients like calcium citrate can enhance the nutritional value, appealing to health-conscious consumers while still satisfying their cravings.