US cereal U-turn: 10% upswing over next four years, says Packaged Facts
The US $12bn breakfast cereal market had been in a state of steady decline for a number of years but this was set to change in 2014, according to research firm Packaged Facts’ latest report – Cold and Hot Breakfast Cereals in the US.
The US breakfast cereal market will surge 10% between 2014 and 2018 to hit $13bn, it said.
Packaged Facts said a “perfect storm” of cultural, culinary and demographic trends had caused weakness in the category for some time, as consumers resorted to all-day snacking, breakfast on-the-run or cereal bars, bagels and yogurts. However, that, it said, was soon to be a thing of the past.
“Breakfast cereal marketers have begun to see glimmers of hope for their beleaguered category.”
“Senior executives from major breakfast cereal marketers continue to express the firm conviction that they are on the right path to revive their cereal business,” it said.
Hot hope and snack secrets
While cold breakfast cereal had slumped in 2013, Packaged Facts said the hot cereal category had seen “a noticeable uptick in sales”.
Packaged Facts said its survey – conducted with 2,000 online panelists in January/February, 2014 – indicated that 75% of adults ate cold cereal and more than 60% ate hot cereal.
Three out of five consumers who eat cold cereal said they consumed it daily, and two in five who eat hot cereal did so daily too.
“Moreover, Americans still eat breakfast morning, noon and night. More than 40% of cereal consumers eat it as an evening or late-night meal or snack. In fact, cold cereal plays a crucial role in the lives of snackers. Two in five cold cereal eaters consumer cold cereal as a snack right out of the box, while 15% mix it with other ingredients to make their own customized snack mix,” it said.
Healthy foods consultant Julian Mellentin previously told BakeryandSnacks.com that cereal makers had to play catch up with the snacking mega trend.
“Breakfast is not just cereal; it’s Starbucks, smoothies, fruit. Manufacturers should find all the segments to compete in – it requires a diversification of your product portfolio. Portfolios will have to become highly fragmented,” he said.
Packaged Facts also identified Hispanic consumers as a growth tool for the future of US cereal.
It said there would be “substantial growth” in the population of Latinos under the age of 14. “Presently, Latinos account for one in four of those under the age of 14. And in states such as California and Texas, Latino kids are in the majority of this age group.”
The research firm said Hispanic households consumed more cereal than non-Hispanic households. Data indicated that 39% of Hispanic households with children consumed 21 or more cold cereal servings in 30 days, compared to 33% for non-Hispanic households.
“Hispanic households without children are nearly twice as likely as their non-Hispanic counterparts to have consumed this volume of cold cereal in the past 30 days,” Packaged Facts added.
General Mills’ CEO told analysts at this year’s CAGNY conference in New York that Hispanics were one consumer group that offered growth hope for business.
“Hispanic consumers are family orientated and they value leading consumer brands,” Ken Powell said.
Innovation and marketing have been ramped up
Packaged Facts added that major cereal players had also heavily invested in innovation and marketing over 2013 – something that would underpin growth this year.
Last year saw a flurry of NPD, marketing campaigns and patent filings from the cereal majors including Kellogg’s Special K Nourish hot cereal launch, Nestlé’s omega-3 flaxseed cereal fortification patent, Weetabix’s Weight Watchers tie-up, and General Mills’ Lucky Charms campaign over Pride month.
Packaged Facts said all these factors would “combine to overcome the potential drag of competition from other types of on-the-go breakfast food”.