According to a Mintel survey, around four in ten of the all-important millennial consumer group find cereals an ‘inconvenient meal’, shunning the burden of pouring milk into a bowl for alternatives such as cereal bars and other baked goods that are better suited to eating on the go.
Cereal is also fighting a battle on the health front, with alternative products doing a better job of tapping health trends such as demand for protein while cereals suffer from perception that they are high in sugar and artificial ingredients.
Against this backdrop, the value of the US cold cereal market slumped by 1.2% in 2015 to $8.9bn, while unit sales fell 1.7%, according to data from retail analysis IRI for the 52 weeks ending 27 December 2015.
But the cold cereals industry is fighting back – and last month Kellogg chairman and CEO John Bryant declared he expected his own US cereals business to be back in growth in 2016. He said the Kellogg cereal division was benefiting from on-trend launches such as Special K Nourish, while licensed products such as Avengers and Frozen cereals had “put fun back in the box”.
IRI data shows Kellogg’s Frosted Flakes and Special K struggled in 2015, although Raisin Bran grew an impressive 4.6% by value.
“We invested where we needed to and improved the fundamentals,” said Bryant. ““We are excited about the plans for 2016 and expect continued improvement.”
Top 10 US cold cereal brands - year-on-year performance
There are also some positive signs from rival General Mills, with sales of Cinnamon Toast Crunch up 7.9%.
The business is continuing to fight consumer concerns about the health credentials of cereal, announcing in January that 75% of its brands were now free from artificial colors and flavors.
And it told analysts at February’s CAGNY conference that making Cheerios gluten-free last summer had already brought “encouraging results”, while adding that Honey Nut Cheerios had recently posted “its best quarter of growth in almost four years”. It also announced organic brand Annie’s would be returning to the cereals aisle with three new products.
And with IRI stating that innovation remains strong in the category – with “a good mix of healthier and protein and wholegrain infused solutions such as Cheerios Protein and Weight Watchers cereal” – perhaps even those millennials could be tempted back to the cereal aisle.