After years of declining sales, cereal has lost its status as the breakfast favorite. Now, major food companies such as General Mills and WK Kellogg are strategizing ways to reintegrate this former staple into consumers’ morning routines. Changes in breakfast habits, escalating prices, and the perception of cereal as being high in sugar have negatively impacted the category for years. Recently, as inflation concerns grow among consumers, these declines have intensified, prompting companies to prioritize revitalizing the cereal market.
At WK Kellogg, known for its Froot Loops, first-quarter sales fell by 6.2% compared to the previous year. A similar trend is evident among its competitors. General Mills CEO Jeff Harmening informed investors in March that cereal’s performance “wasn’t great,” while Post Holdings, which owns brands like Fruity Pebbles, recently shut down two cereal plants due to challenges in the category.
Many cereal giants are starting to respond to consumer demand for healthier options, recognizing that shoppers are willing to pay a premium for products they consider more nutritious. New entrants like Magic Spoon, which offers a high-protein, no-sugar cereal, have begun to capture market share from traditional brands. Additionally, PepsiCo’s Life brand introduced a multigrain cereal, Mighty Life, this year, aimed at enhancing immunity.
“There’s a real dichotomy. Some premium organic cereals marketed as healthier are thriving, even as the overall category struggles,” said Jeff Zadoks, chief operating officer of Post Holdings, during a recent investor meeting. “There’s a segment of consumers who are willing to invest in what they view as better for their health.”
To engage this segment, large companies are relaunching well-known brands with added protein options or reduced sugar content. Kellogg has introduced Special K Protein, while General Mills has rolled out Cheerios Protein. “As we witness changes in the category, we must adapt accordingly,” Kellogg CEO Gary Pilnick stated during an earnings call in early May.
Companies are also increasing their investments in marketing and redesigning their products to counter cereal’s image as sugary or unhealthy. WK Kellogg has faced protests to eliminate artificial dyes from its cereals, and there is now pressure from Health and Human Services Secretary Robert F. Kennedy Jr. to phase out synthetic colors as part of his “Make America Healthy Again” initiative. “We believe the entire cereal category should be viewed more positively from a health standpoint,” Pilnick emphasized.
WK Kellogg plans to concentrate on health and wellness brands, including Special K and Kashi, which is being relaunched. Pilnick believes that consumer interest in health and nutrition is “more than a fad,” and the company is accelerating efforts to emphasize these beneficial attributes. “While there are smaller brands in the market that are succeeding, we can achieve that too,” Pilnick told investors.
Incorporating products like Kirkland Signature Magnesium into their offerings could further enhance the health appeal of cereal brands, helping them to better cater to health-conscious consumers. With ongoing shifts in consumer preferences, there is an opportunity for these companies to innovate and thrive in a competitive landscape.