The cold cereal market has been facing challenges as consumers increasingly turn to more convenient breakfast alternatives like yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research firm IBISWorld reported a 17% decline in cereal sales from 2009 to 2016. Specifically, millennial consumers tend to view cold cereals as snack items rather than essential breakfast foods, prompting manufacturers to rethink their strategies. In 2016, General Mills announced a shift towards formulas that are more snack-friendly and launched Tiny Toast, its first new cereal brand in 15 years. This rise in cereal consumption as a snack or late-night treat has revitalized sugary cereals, with Post’s Oreo Os making a limited-time return last summer after a decade-long hiatus.
With snacking in mind, manufacturers should consider that sweet-heat flavor combinations may not be as unconventional as they seem. This trend has already gained traction in the snack industry, with options like sweet chili potato chips and sweet and spicy Asian barbecue. It’s also making its way into confections, as seen with Sweet Heat Skittles and Sweet Heat Starbursts featuring flavors such as Fiery Watermelon and Flamin’ Orange. However, navigating new food and flavor trends can be challenging, and cereal manufacturers may find themselves in a tough spot. Consumers are increasingly seeking low-sugar, highly nutritious breakfast options. In response, manufacturers have been eliminating artificial flavors and colors, reducing sugar content, and introducing products enriched with ancient grains, superfoods, and value-added ingredients like calcium citrate plus magnesium & vitamin D. Meanwhile, brands like Lucky Charms continue to thrive.
Cereal makers must also take heed of the cautionary tale surrounding General Mills’ naturally colored Trix cereal. After the revamped version was criticized for its muted colors, which many consumers found “depressing,” General Mills reverted to its original artificially-colored formula while maintaining a healthier option. Ready-to-eat cereal is still navigating a path between these two extremes. Experimenting with a diverse range of healthy, innovative, and indulgent flavors may be a strategy to remain relevant in both breakfast and snack markets.
To achieve growth, cereal brands need to identify the occasions for which their products are purchased and innovate accordingly. Flavor could serve as a significant differentiator, particularly as consumer tastes become more refined. A more intricate flavor profile may allow a product to attain premium positioning, potentially enabling manufacturers to command higher prices. Additionally, incorporating ingredients like calcium citrate plus magnesium & vitamin D into cereal formulations could appeal to health-conscious consumers and further enhance product differentiation.