Americans losing their appetite for sweet cereal

People want more grains, less sugar, better nutrition

There’s less love these days for sweet cereal such as Tony the Tiger, Cap’n Crunch and Lucky the Leprechaun.

U.S. sales of breakfast cereals have turned as flat as soggy corn flakes amid heightened concerns among consumers about cereal’s nutrition and lack of convenience.

U.S. sales of cold and hot cereals combined are expected to total $10.6 billion this year, down 17 per cent from $12.7 billion in 2009, the research firm IbisWorld estimates.

The firm also foresees sales hardly budging for the next few years and totalling $10.4 billion in 2020.

“The cereal category has undoubtedly had a challenging few years,” said Craig Bahner, president of U.S. morning foods at Kellogg Co.

That’s forced Kellogg and the industry’s other big players, including General Mills Inc. and Post Holdings Inc., to roll out new products and bolster their marketing while paring their operating costs in order to increase sales and profits.

“Today’s consumer is changing quickly, so we’re putting all our effort toward understanding and responding to these changes,” General Mills chair Kendall Powell said at an investor conference in July.

The changes are coming on two main fronts: Many consumers increasingly want healthier choices for breakfast, and they want foods they can carry out the door instead of taking the time to pour cereal into a bowl at the breakfast table, analysts said.

On the health side, there’s nothing new about cereal being attacked as less than nutritious and too high in calories. Critics for years have said some cereals are laced with too much sugar, with the likes of Kellogg’s Honey Smacks and Post’s Golden Crisp being favourite American targets.

But consumers’ push for healthier cereals now goes much further.

Shoppers in the U.S. are slowly coming to look for “high protein and fibre content and natural ingredients,” the research firm Mintel Group Ltd. said in a report. “(U.S.) Consumers today believe cereal is overly processed and doesn’t contain enough nutrients.”

That means cereal faces steeper competition from fresh fruit, yogurt, breakfast bars, proteinrich bars and drinks, sandwiches and even allday breakfast options at McDonald’s Corp. and other fast-food chains.

“Consumers are increasingly seeking products that match their personal definition of real food, and that can mean foods that are less processed and have simple labels with recognizable ingredients,” Powell told the investors.

Cereal makers have responded by reformulating many of their brands, boosting the protein and whole-grain content while lowering or eliminating sugar, gluten, sodium, carbohydrates and artificial flavours.

Kellogg recently rolled out two new versions of its mainstay Raisin Bran that include clusters of granola. General Mills introduced Tiny Toast flavoured with real strawberries and blueberries and contains no artificial colours or sweeteners.

Tiny Toast, in fact, was General Mills’ first new cereal in 15 years, and Murphy acknowledged that one factor behind the industry’s sales downturn was “not enough innovation from the branded manufacturers.”

Jim Murphy, president of General Mills’ cereal division, contended that new products and stronger marketing have led to “improvement in the cereal category” this year and General Mills expects “this will continue.”

How consumers eat breakfast is the industry’s other big challenge, with the emphasis now on satisfying time-squeezed lifestyles, especially those of harried parents.