General Mills announced earlier this week it would remove all artificial ingredients from its cereal portfolio in the next two to three years. The cereal major said it had been working on the move for some time in response to consumer demand.
Jared Koerten, senior food analyst at Euromonitor International, said it wouldn’t be long before Kellogg followed.
“There’s a lot of pressure for others to follow. For example, in confectionery when Nestlé made the announcement to remove artificial ingredients, Hershey quickly followed suit and everyone then immediately looked at Mars,” he told BakeryandSnacks.com.
“It’s one of those things – if everyone is doing it and you’re the one that’s not, you’ll stand out.”
Watch and learn
However, Koerten said Kellogg may not act immediately; opting to sit and watch how the move goes for General Mills first.
“Since General Mills is the first mover here, Kellogg can see how things play out. If General Mills comes out with some brands that go to this ‘no artificial ingredients’ positioning and it provides a certain uptick in sales and is worth the investment, Kellogg may be more interested,” he said.
“… If [reformulation] is possible and they could do it in a few years, Kellogg will look to follow suit, especially as the breakfast cereal market is often targeted towards kids and parents buying food for kids.”
He said for breakfast cereal makers, the pressure to develop artificial-free products was even higher than other food segments because of the significant younger consumer base.
“Parents are just looking for more natural products, and if you want a chance to compete with these natural and organic brands that are popular with millennials it’s a move you should be seriously considering.”
Timing was also right, he said.
“This is going to be well perceived in the US. Across the board, there really has been a backlash against things that are perceived as unnatural… It’s really in line with what we’re seeing the big food companies doing in terms of trying to capture consumer interest.”
Asked if removing artificial ingredients could draw in new consumers, he said: “I think it can, but I don’t think you’re going to see someone who is buying Cascadian Farm going out and switching to Trix just because it’s all-natural. I don’t think you’ll ever convince a person who always goes to Whole Foods that Trix is a product they should be buying.”
A cereal turnaround?
Koerten said while the move away from artificial would prove popular among consumers, it was unlikely to spark a drastic upsurge in cereal sales.
Global breakfast cereal sales have remained fairly stagnant for the past few years - pegged at $32bn in 2014; only slightly up from 2011 sales of $31.4bn, according to Euromonitor International data. US breakfast cereal sales declined over the same time period - from $11.5bn in 2011 to $11bn in 2014.
“In terms of looking at the areas where General Mills has struggled, and where the market in general has struggled, I’m not sure if this move towards no artificial ingredients is going to change the broader trends we’re seeing in breakfast. There is a shift away from sit-down breakfast to snack bars, Greek yogurts and Belvita biscuits, for example.
“… It will help General Mills maintain or grow a bit of its share, but I don’t think it’s going to turn the entire market around,” he said.