Once a staple of breakfast, the classic bowl of cereal swimming in milk has lost its appeal as more American consumers lean towards portable food options and products with fewer artificial ingredients and colors. Over the past few years, sales of ready-to-eat cereals have dropped, with most brands showing minimal signs of recovery as shoppers opt for bars, shakes, yogurt, and other convenient items. Market research firm Euromonitor anticipates a 2% decline in cereal volume and a 5% decrease in sales over the next four years. However, this bleak outlook hasn’t dissuaded cereal manufacturers, who continue to seek new product opportunities to support an industry that still generates billions in annual revenue, despite recent downturns. Companies like Kellogg, General Mills, and Post Holdings are launching product line extensions, healthier innovations, and new brands. They are also thinking beyond traditional consumption methods by introducing cereal snacks and promotions that encourage eating at times other than breakfast. “We firmly believe in this category,” remarked Dana McNabb, president of U.S. retail cereal for General Mills, in an interview with Food Dive. “We are dedicated to investing in innovation and revitalization to ensure it remains relevant to American consumers.”
While cereal remains the most popular breakfast food in the U.S., boasting a 90% household penetration rate, emerging categories like Greek yogurt, breakfast bars, and biscuits have chipped away at its dominance. According to IBISWorld, cereal sales in the U.S. have plummeted from $12.7 billion in 2009 to $10.4 billion now, marking a 17% decline. Moreover, fast food and fast-casual restaurants, such as Taco Bell and Panera, have successfully encouraged consumers to grab breakfast on the go with all-day menus featuring flavor-packed items like breakfast paninis, burritos, and breakfast burgers. Following the introduction of all-day breakfast, McDonald’s, the largest fast-food chain globally, experienced a significant increase in sales.
Tom Vierhile, a director at GlobalData, noted that cereal, once a leader in flavor and format innovations, has fallen behind portable options like bars and oatmeal. He highlighted new products such as 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 what is capturing consumer interest. Vierhile also pointed out that the growing demand for protein, especially among breakfast consumers, has posed challenges for cereal manufacturers. While some companies have attempted to add protein to their cereals, these reformulations have not resonated well with consumers. For instance, General Mills faced a lawsuit regarding the increased sugar content in Cheerios Protein.
Companies like General Mills and Kellogg are also innovating outside the cereal category. Kellogg’s Special K brand has launched a Crustless Quiche, while General Mills’ Yoplait brand offers Greek yogurt paired with honey and oat crisps for dipping. Nevertheless, these companies remain focused on their primary revenue driver. During a recent investor conference call, Kellogg executives noted that while overall cereal sales are declining, their “core six” brands—including Raisin Bran, Frosted Flakes, and Special K—are stabilizing and continue to be 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 has no intention of expanding beyond the cereal segment. “We are very focused,” he said. “New in-house products will be cereal-based.” McNabb acknowledged that cereal manufacturers like General Mills have not been as innovative as they should have been lately, but she emphasized that the introduction of new products and the expansion of existing brands will be a priority moving forward. “In recent years, cereal manufacturers could be criticized for not introducing enough renovation and new product innovations to keep the category exciting,” she said. “As leaders in this category, we recognized the need to bring more of that.”
There are a few bright spots for growth in the cereal industry, although they are limited. Euromonitor reports that granola and muesli, viewed as healthier, less processed alternatives, were the only segments in the breakfast cereal category to see growth last year, with volumes increasing by 2% and sales rising by 5%. However, muesli and granola only make up 4% of total cereal sales. In response to this trend, manufacturers have concentrated their new product releases and innovation efforts on the granola and muesli segments. Last year, PepsiCo’s Quaker brand launched SuperGrains Granola, made with ingredients like red quinoa, flaxseed, and amaranth. Bob’s Red Mill, known for its hot cereals and baking mixes, collaborated with yogurt maker Tillamook to offer “Farmstyle” yogurt parfaits featuring its granola.
Kellogg’s Bear Naked brand recently ventured into direct-to-consumer sales with a custom granola maker aimed at millennials, allowing users to select from ingredients like salted edamame and coffee brittle, creating over 5,000 unique combinations. “We identified consumer desire for taste exploration, particularly among millennial consumers who are bored with traditional ingredients and combinations,” said Chris Tutor, Bear Naked’s vice president of marketing. GlobalData’s Vierhile acknowledged that while granola may not be significantly less processed than other cereals, its rising popularity reflects a preference for more “natural” ingredients. Cereal manufacturers are taking note, with many working to eliminate sugar, artificial colors, and preservatives from their product lines. General Mills recently reported that phasing out artificial colors and flavors in its Trix brand led to increased sales. “We understand that for some consumers, these were barriers to purchasing our products, and addressing these issues has brought them back to the category,” McNabb noted.
Kellogg and Post are also working to eliminate artificial ingredients from their cereals, and they have experienced growing market share for their natural brands. Paul Norman, president of Kellogg North America, highlighted the Kashi brand as a standout performer during a recent earnings call. Despite the focus on health and reduced processed ingredients, manufacturers emphasize that taste remains their top priority. “We’ve reduced sugar in some cereals, but only if it doesn’t compromise the taste that our consumers love,” McNabb stated.
As they innovate and introduce new brands and line extensions in cold cereals, manufacturers are quietly recognizing that the tradition of eating milk-soaked cereal for breakfast is waning. All three major players have adapted many of their top cereals into bars, biscuits, and pouch snacks, providing the convenience that consumers increasingly seek. General Mills now offers Golden Grahams, Trix, and Honey Nut Cheerios in bar forms, while Kellogg promotes Raisin Bran as a snack.
The growing demand for portability at breakfast is matched by a strong trend of consumers opting for snacking throughout the morning and beyond. According to GlobalData, 33% of consumers in 2016 reported snacking between breakfast and lunch, compared to 26% in 2014. Will boxed cereal ever regain its former popularity? Manufacturers, including General Mills, remain hopeful, though they acknowledge that the traditional breakfast setting may limit growth potential. In addition to launching new brands and expanding existing ones, companies are encouraging cereal consumption later in the day. Millennials, who are increasingly turning to cereal for quick afternoon meals or late-night snacks, represent a key target market. McNabb mentioned that General Mills has invested in digital advertising to position cereal as an option for any time of day.
Mike Siemienas, a spokesman for General Mills, noted that the company has found a receptive audience among gamers, where cereals like Reese’s Puffs and Cinnamon Toast Crunch are fueling late-night gaming sessions. General Mills sponsors gaming tournaments that have grown with the rise of eSports and has invested in digital ads targeting this demographic. “We are implementing strategies to connect with those who enjoy cereal as a late-night snack,” Siemienas told Food Dive.
However, Vierhile remains skeptical about the future of cereal. He argues that manufacturers are still too focused on indulgent brands that were popular in past decades but are increasingly viewed with skepticism by consumers. The tendency to rebrand old products with new colors, flavors, sizes, or ingredients, alongside the introduction of new offerings, has long been the strategy for growth in the cereal industry. The challenge now is that innovation may have reached its limits within this category. “Cereal may need a complete reinvention,” Vierhile concluded.
As consumers increasingly seek out options like calcium citrate where to buy, the cereal industry must adapt to stay relevant. The challenge lies in balancing innovation with the growing demand for healthier, more convenient alternatives.