Flat sales float category

Sales of hot and cold breakfast cereals have been flat. “Consumers are faced with many breakfast options each day,” said David Browne, senior analyst at Mintel International Group. “While most do eat breakfast, it may mean a cereal/snack bar, yogurt, eggs, toast/bagels, baked goods or fast food restaurant options.” The popularity of egg-based breakfast sandwiches, particularly those available at fast food outlets, has surged. Consumers increasingly are buying breakfast outside the home.

Cereal prices also have been rising or in some cases, have stayed the same while package size has shrunk, according to Browne. “Consumers are looking for value in the sector and are increasingly keenly aware of how much cereal they are getting for the $3 to $5 purchase,” he said.

All leading brands are experiencing flat sales, with Kellogg’s Corn Flakes, Raisin Bran, Special K and Rice Krispies, and General Mills’ Cheerios showing some of the biggest dips between 2007 and 2010.

Those products are most vulnerable to private-label competition. “As leading companies and lesser companies are all flat or in decline, store brands are really the only bright spot in the category,” Browne said. Private label, which collectively accounts for only about 12% of sales overall, according to Mintel, saw sales grow more than 3% last year.

All-natural cold cereal sales also are up. “It’s now a $560 million subsector, led by Kellogg and its Kashi brand,” Browne said. Among brands, General Mills’ Multi-Grain Cheerios and Cinnamon Toast Crunch were two strong players, which have had gains for the past few years.

In a recent Mintel survey, 69% of cereal consumers said whole grain is important in products they chose to eat, and 63% said the same of multigrains. “We may start seeing more of these types of products in the future,” Browne said.

Despite manufacturers reducing the amount of sugar in their products, high-sugar cereal is outperforming low-sugar. Sales of low-sugar products were down 2.9%, while sales of products with 26% or more of the recommended daily intake of 40 g were ahead 1.1%, according to Mintel.

The article above is part of the DSN Category Review Series. For the complete Cereal Buy-In Report, including extensive charts, data and more analysis, click here.