Cereal no longer the go-to breakfast option
By Food in Canada magazine staffBusiness Operations Food Trends
A new report finds that consumers in the U.S. are skipping cereal and choosing other cereal-killer options
New York – There’s a serial killer on the loose. Actually that’s “cereal” killer and there’s more than one.
A new report out of the U.S. from Rabobank says that breakfast cereal consumption is declining because consumers are turning to other breakfast options.
The report, Cereal Killers: Five Trends Revolutionizing the American Breakfast, looks at the factors that are contributing to the decline and asks one clear question:
“Is breakfast cereal, a staple once characterized by strong innovation and competitive brand marketing, failing to meet the challenges of the 21st century consumer landscape?”
Nicholas Fereday, global senior analyst with Rabobank’s Food & Agribusiness Research and Advisory group, adds that “Flat sales and declining volumes over the past decade indicate consumers are tiring of boxed cereals, lured away by more contemporary, aspirational and convenient morning eating options in other grocery aisles or restaurants.”
In the report, Rabobank identifies five trends, or what it calls “cereal killers,” that are changing U.S. consumers’ breakfast habits:
1) “I’ll take that to go.” Breakfast is the new eating-out occasion.
2) “Snackfast.” Consistent with trends across all eating occasions, the rising culture of snacking is transforming breakfast into “snackfast” as consumers seek convenience and portability.
3) Beware of Greeks bearing yogurt! Protein is the latest superfood promising satiety and weight management.
4) The nutrition challenge. As politicians and pundits weigh in on what to eat, the cereal industry struggles to find the balance between regulation and self-regulation without alienating consumers. Consumers today are more interested in the nutritional profile of food than in past eras, and the cereal category has two hot-button issues – added sugars and marketing to children – which attract critics.
5) Boomers or bust? With declining birth rates, the growth of a key cereal-eating demographic, children, is slowing. Who will be left to munch on cereal in the future? If millennials are a lost cause, is it a case of Boomers or bust?
Strategies and innovation
Rabobank says that despite the trends reshaping the American breakfast meal, the cereal market still has potential.
In fact, there are several strategies breakfast cereal companies can use to grow their businesses and take advantage of trends currently undercutting their market.
Among the possible strategies cereal companies have are innovation and targeted marketing that emphasizes the importance of breakfast as the most important meal.
They can also:
• Renew the focus on innovation: Make bigger and better bets to generate new brand platforms, such as Kraft has done with Mio, Oscar Mayer Selects and Velveeta Skillets.
• Spend more on food ingredients relative to advertising budgets, learning from the success of fast growing companies such as Clif Bar & Company, Chipotle Mexican Grill, Inc., and Whole Foods Markets, Inc. food does not have to be a least-cost formulation.
Re-write the marketing message
The breakfast cereal category pioneered marketing in the age of mass media, but Rabobank says it is struggling to find its voice and target customers in today’s age of multimedia and fragmented retail channels.
Equally, many current consumer food trends do not necessarily play well to cereal’s core strengths, as consumers move away from highly processed foods.
Nevertheless, Rabobank believes breakfast cereals remain a highly relevant platform for delivering many health and wellness positives, but that manufacturers need to rewrite their message to consumers regarding the relevance of their product.
“Despite the numerous health positives associated with breakfast cereal, some companies already appear to be exiting through the snack aisle. We are not predicting the end of this $10 billion market, rather, we believe that breakfast cereals can aspire to more than single-digit growth and erosion of market share,” says Fereday.
“To turn the tide, we suggest a renewed focus on innovation, a rebooting of the message to consumers, and, for children’s cereal, an embrace of what you are, even if that means new positioning in a different grocery aisle.”
Photo from Sargent College
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