The cold cereal market has been facing challenges as consumers increasingly opt for more convenient breakfast alternatives such as yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research from IBISWorld indicates that cereal sales dropped by 17% from 2009 to 2016. Particularly, millennial consumers tend to view cold cereals more as snack items rather than essential breakfast foods, prompting manufacturers to rethink their strategies. In 2016, General Mills announced its intention to “focus on formulas that are increasingly snackable,” and later that June, they introduced Tiny Toast, their first new cereal brand in 15 years. The shift towards cereals as snacks or late-night desserts has contributed to the revival of sugary cereals, including Post’s Oreo Os, which made a limited-time comeback last summer after being off shelves for a decade.
With snacking in mind, manufacturers might discover that sweet-heat flavor combinations are more viable than they initially seemed. This flavor trend has already gained traction in the snack sector, with products like sweet chili potato chips and sweet and spicy Asian barbecue. It’s also making its mark in candy, evidenced by 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 not without its challenges, and cereal producers might find themselves 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 added benefits like probiotics and protein.
At the same time, brands like Lucky Charms continue to enjoy lasting success. Cereal makers should take heed of the cautionary example set by General Mills’ naturally colored Trix cereal. After facing backlash for the new muted colors—deemed “depressing” by some consumers—General Mills reinstated its original artificially colored formula alongside the healthier version. Ready-to-eat cereal is now navigating a space between these two extremes. Experimentation with a variety of healthy, innovative, and indulgent flavors could help maintain cereal’s relevance, whether as a breakfast option or a snack.
To achieve growth, cereal brands must understand the specific occasions for which their products are purchased and innovate accordingly. Flavor could become a significant differentiator, especially as consumer tastes evolve. A more complex flavor profile may enable a product to attain premium positioning, allowing manufacturers to command higher prices. Additionally, integrating ingredients like pure encapsulations calcium magnesium could enhance the nutritional profile, appealing to health-conscious consumers. By focusing on these innovative strategies and flavor dynamics, cereal brands can revitalize their offerings and cater to the changing preferences of their audience.