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Dispatches from IFT 2014: 8-minute insight from Mintel innovation directors

Crunch time: Is breakfast cereal doomed to sink?

By Kacey Culliney+

02-Jul-2014
Last updated on 03-Jul-2014 at 13:06 GMT

The global breakfast cereal market faces increasing competition as consumers turn to convenient alternatives, so how can manufacturers step up to compete and stimulate often dwindling sales?

Speaking to BakeryandSnacks.com at IFT 2014 in New Orleans, David Jago and Lynn Dornblaser – Mintel’s directors of innovation and insight – chewed over some of the biggest challenges facing cereal makers; where opportunities truly existed; and what industry had to do to inject excitement back into the category.

Increased competition and skipping breakfast

David Jago and Lynn Dornblaser said competition against breakfast cereals had toughened, with yogurts, breakfast biscuit, fresh fruit and dairy drinks consumed in place of a traditional bowl of cereal.

These products, they said, were being chosen because of their convenience aspect.

Asked if cereal executives were wrong in their claims that growth opportunities existed, Jago said: “People are still eating cereal, of course, it’s a huge market. But people aren’t necessarily eating breakfast cereal every day.” Young adults in particular were either skipping breakfast or seeking other products, perhaps protein-rich yogurts or bars, he added.

Dornblaser said in addition to skipping breakfast, many were eating cereal at other times of the day. “There are a pretty good percentage of consumers who eat breakfast cereal for dinner, for example, or as an evening snack,” she said.

Is the ‘breakfast’ name holding the category back?

Jago said the name ‘breakfast cereal’ could potentially limit usage, and while consumers did eat cereal outside of the breakfast occasion, products weren’t geared up to cater for these occasions.

However, Dornblaser said some companies had started to develop convenient, on-the-go product types. Kellogg, for example, had recently launched smaller formats of its key brands to target on-the-go consumption.

Europe however, hadn’t successfully innovated in that area yet, Jago said. “We’ve seen companies try and do it in the past. I don’t think anyone’s really made it work. I think they’re missing a trick there.”

Look to Starbucks – they’ve reinvigorated hot cereal

Dornblaser said the cold and hot breakfast cereal categories were different – hot was declining less than cold.

She said in the US hot cereal had been bolstered, interestingly, by Starbucks with its easy-to-make, personalized hot cereal options. “What Starbucks has done over the last couple of years has gotten a lot of US consumers thinking about hot cereal again.”

Manufacturers had responded with convenient pot options, she said, Quaker being one example.

Developing markets the growth promise?

Jago said that many developing Asian markets held growth opportunities for breakfast cereal, but they needed to be selected carefully.

In China for example, hot cereal was already widely consumed and cold cereal only considered a kids’ food. He said, on the whole, opportunities would be found in adult-targeted products in most developing Asian markets.

Dornblaser said it was the opposite for Latin America. Kids’ cereals held great promise in markets like Brazil and Mexico, she said, particularly the latter where the population of children was huge.

A key message for cereal makers

“Get out of the big box format,” Jago said. “The big box format isn’t going to be where the growth lies – they know this. It’s about smaller sizes; it’s about customized portions… going after the individual, rather than the family.”

Dornblaser said it was about looking beyond breakfast. “Look to all types of snacking occasions especially, and other meal occasions, because cereal has a place – especially in the US market – to be eaten at any time of the day.”

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