Cereal makers try to get millennials back to table
Young consumers prefer more portable breakfast meals.
Ashley Peters is the kind of consumer cereal makers such as General Mills both court and fear.
She grew up eating breakfast cereal — from Cheerios to Cap’n Crunch — and now at age 30 she’s part of the coveted millennial demographic. But these days, Peters usually reaches for a granola bar at breakfast, which she often eats on the job.
“It’s just easier to do,” said Peters, 30, a communications manager at a St. Paul, Minn., nonprofit group. “I don’t have time for milk at work.”
Cereal is still king of the American breakfast, but its realm is shrinking as consumers look for more convenience and variety.
The percent of in-home breakfast meals that include cereal dropped from 31 percent in 2009 to 26.8 percent last year, according to market researcher NPD Group.
Meanwhile, U.S. cold cereal sales fell 9 percent from 2011 to 2015, according to market researcher Nielsen. Over those four years, breakfast cereal experienced a bigger sales contraction in absolute numbers than any other packaged food business, including the ailing soft-drink industry, Nielsen said.
This is all particularly bad news for Minnesota, home of General Mills, one of the nation’s two major cereal makers. The state also is a big hub for the No. 3 cereal company, Post Holdings.
Cereal manufacturers haven’t been bowling over customers with innovative products in recent years. But they are finding other ways to fight back, excising dyes and other ingredients perceived as unhealthy. They’re marketing cereal as an alternative to other snacks.
“I’ve heard cereal being killed off three or four times in my career,” said Jim Murphy, head of General Mills’ U.S. cereal division. “But it’s a highly resilient category.”
Cereal is General Mills’ biggest U.S. retail business, generating $2.3 billion in annual sales, or 13 percent of total revenue. The company, which turns 150 this year, began making cereal in the 1920s with the launch of Wheaties. These days, General Mills’ Honey Nut Cheerios is America’s top-selling cereal. General Mills and Kellogg each control about 30 percent of the U.S. cereal business.
Ready-to-eat breakfast cereal was originally sold on its convenience, and it’s still hardly a tall order to fix up a bowl of Cheerios. But cereal isn’t very portable, and food portability is increasingly important to consumers.
A study last summer by consumer research group Mintel concluded that convenience at breakfast was especially critical among millennials, defined by Mintel as between ages 22 and 39. Measured against three older groups, millennials by far agreed most with the idea that cereal should be more portable, and that cereal is inconvenient because it involves washing dishes.
Other researchers aren’t sold on the notion that millennials have soured on cereal just because of inconvenience.
“When we look at the food consumption trends of millennials, they are increasingly involved in food preparation,” said Darren Seifer, food industry analyst at NPD Group. “They will spend more time with their food.”
Food preparation can be a road to convenience, too, as Jaks Pierre discovered.
Pierre, 25, a communications specialist at a Minneapolis marketing agency, took time on Sunday nights to make five egg-andcheese breakfast sandwiches, freezing them for a microwaveable breakfast. But she switched to cereal recently because — in her case — it suddenly became easier: Her employer, SixSpeed, installed a cereal bar.
“It’s a huge convenience,” Pierre said.
Breakfast cereal’s woes are also linked to the proliferation of options, from snack bars to a plethora of yogurt styles. Classics like eggs and bacon are back in vogue, and both play well to the protein dietary trend. Fruit consumption at breakfast also has risen over the past decade, NPD data show.
In some consumers’ eyes, cereal is on the wrong side of trends that vilify carbohydrates and sugar.
“Personally, I am trying to avoid sugar,” said Terrie DeBaker, 50, a real estate services worker from suburban St. Paul who has switched from cereal to eggs and toast at breakfast.
DeBaker said that her husband and two children, ages 14 and 21, “just kind of lost our taste for cereal.” She said her children are more apt to eat bagels or waffles.
Cereal is still in DeBaker’s pantry, but it’s more often eaten as a snack, she said.