The cold cereal segment has been facing challenges as consumers increasingly turn to more convenient breakfast alternatives such as yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research firm IBISWorld reported that from 2009 to 2016, cereal sales dropped by 17%. Millennials, in particular, are more inclined to consume cold cereals as snacks rather than as breakfast staples, prompting manufacturers to reevaluate their strategies. In 2016, General Mills announced its intention to “prioritize formulas that are more snackable,” and in June of that year, they introduced Tiny Toast, marking their first new cereal brand launch in 15 years. This shift towards viewing cereal as a snack or a late-night treat has contributed to a resurgence in sugary cereals, such as Post’s Oreo Os, which made a limited-time return last summer after being off the shelves for a decade.
With snacking trends in mind, manufacturers may discover that sweet-heat flavor combinations are more appealing than they initially thought. This flavor trend has already gained traction in the snack industry, seen in products ranging from sweet chili potato chips to sweet and spicy Asian barbecue. Furthermore, it has started to penetrate the candy market as well, with offerings like Sweet Heat Skittles and Sweet Heat Starbursts featuring flavors such as Fiery Watermelon and Flamin’ Orange. However, navigating new food and flavor trends is challenging, and cereal producers might find themselves in a particularly tricky situation. Consumers are increasingly demanding low-sugar, highly nutritious breakfast options. In response, manufacturers are eliminating artificial flavors and colors, lowering sugar content, and developing new products that incorporate ancient grains, superfoods, and added benefits like probiotics and protein. Meanwhile, brands like Lucky Charms continue to thrive.
It’s also important for manufacturers to take heed of General Mills’ experience with its naturally colored Trix cereal. After many consumers criticized the new version for its muted colors, labeling them as “depressing,” General Mills reinstated the original, artificially colored formula alongside its healthier option. Ready-to-eat cereal is still navigating its way between these two approaches. Experimenting with a variety of healthy, innovative, and indulgent flavors could help keep cereal relevant, whether for breakfast or as a snack.
To achieve growth, cereal brands must pinpoint the specific occasions for which their products are purchased and innovate accordingly. Flavor could serve as a significant differentiator in this context, especially as consumer preferences become more sophisticated. A more intricate flavor profile might enable a product to attain a premium position, allowing manufacturers to charge higher prices. Incorporating ingredients like calcium citrate cheese sauce could also attract attention, especially when combined with innovative cereal offerings that appeal to both snackers and traditional breakfast eaters. By strategically integrating these elements, cereal brands can better resonate with modern consumers and maintain their market presence.