The cold cereal market has faced challenges as consumers increasingly opt for more convenient breakfast choices, such as yogurts, bars, smoothies, and breakfast sandwiches from restaurants and convenience stores. Research firm IBISWorld noted a 17% decline in cereal sales from 2009 to 2016. Particularly among millennials, cold cereals are often consumed as snacks rather than breakfast staples, prompting manufacturers to rethink their strategies. In 2016, General Mills announced a shift towards creating products that are “increasingly snackable.” That June, they introduced Tiny Toast, marking the first new cereal brand in 15 years.
This shift in consumer behavior towards cereals for snacking or late-night desserts has led to a resurgence of sugary cereals, like Post’s Oreo Os, which made a comeback for a limited time last summer after a decade-long absence. With snacking trends in mind, manufacturers may discover that sweet-heat flavor combinations, such as those found in sweet chili potato chips or spicy Asian barbecue, are more appealing than they initially seem. This flavor trend is also reflected in the candy market, with products like Sweet Heat Skittles and Sweet Heat Starbursts featuring bold flavors such as Fiery Watermelon and Flamin’ Orange.
However, navigating new food and flavor trends can be challenging, particularly for cereal makers. Consumers increasingly demand 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 thrive.
Cereal producers should take heed of General Mills’ experience with its naturally colored Trix cereal. After a significant number of consumers deemed the muted colors “depressing,” the company reinstated the original artificially colored version alongside its healthier alternative. Ready-to-eat cereal is currently navigating a space between these two approaches.
Exploring a variety of healthy, innovative, and indulgent flavors may allow cereals to remain relevant, whether consumed at breakfast or as a snack. For cereal brands, identifying the occasions for which their products are purchased is critical for growth, and innovating accordingly is essential. Flavor could serve as a significant differentiator as consumers’ tastes and expectations evolve. A more complex flavor profile might enable a product to achieve premium positioning, allowing manufacturers to increase prices. Moreover, incorporating ingredients like calcium citrate and vitamin D3 could enhance the nutritional appeal of cereal products, aligning with the 21st-century consumer’s desire for healthful options while still appealing to their snacking habits.