Breakfast… and Beyond

Between the hours of 8 a.m. and 11 p.m., in the heart of Times Square, the Kellogg’s NYC (KNYC) restaurant serves up its finest cereals to hungry guests. Among the specialty bowls are: Life in Color, a helping of Froot Loops with lime zest, marshmallows and passion fruit jam; The Corny Blues, made with Corn Pops, blueberry jam lemon zest and kosher salt; and Berry Me in Green Tea, a mix of Rice Krispies, fresh strawberries and green tea powder. 

Though it is unlikely that such elaborate concoctions will wind up in boxes on retailer shelves anytime soon, it is possible that consumers—buoyed by the creations—will find a renewed interest in cereal beyond just a bowl with milk in the morning. 

There are signs that interest in ready-to-eat cereal is growing. According to a recent report by Chicago-based Mintel, 60 percent or more of consumers, based on generation, say cereal is a great snack food, and about 85 percent say cereal can be eaten any time of day. Industry observers say that one-third of the $8.7 billion ready-to-eat cereal category is eaten outside of breakfast.

“That is bigger than the entire Greek yogurt category,” says Noel Geoffroy, senior vice president of marketing and innovation for Kellogg Morning Foods. “The menu at KNYC delights and inspires guests with amazing cereal creations that include delicious but unexpected ingredients to elevate the traditional cereal bowl. We see growth in cereal behind these two opportunities.”

The seasonal products that Kellogg’s is introducing to the market are also generating growth. These products include Special K Pumpkin Spice Crunch and Mini-Wheats Pumpkin Spice. There are also Halloween-themed versions of Frosted Flakes, Froot Loops and Apple Jacks. This type of innovation is great for the category, as Geoffroy says it keeps people engaged and encourages them to put an extra box into their shopping basket. 

“It can be a great way to bring even more excitement to some of the most popular cereal brands,” he adds. “We’ve seen this with Kellogg’s Raisin Bran. Raisin Bran with Cranberries debuted earlier this year and has exceeded initial sales projections. Raisin Bran Crunch was also improved with addition of more clusters, taking what people love about the brand and amplifying it.”  

Taste is always of utmost importance, but as consumers strive toward healthier lifestyles other needs must be met as well. Kellogg’s, based in Battle Creek, Mich., aims to provide brands that meet the wide range of needs that all consumers have. 

“In general, some people are looking at a variety of breakfast options based on their specific dietary, lifestyle or health requirements,” says Geoffroy. “This has increased the scope of foods with which we must compete to maintain cereal’s position as the No. 1 breakfast choice. The good news is that there are a wide range of ready-to-eat cereals available, fitting the nutritional needs and taste preference of just about every potential consumer.”

One of the biggest issues today’s consumers have with the cereal they eat is the presence of artificial colors and flavors. General Mills, based Minneapolis, recently conducted a survey that revealed that many consumers are looking to avoid artificial flavors and colors from artificial sources. 

“We focus on providing consumers what they want,” says Dana McNabb, vice president of Cheerios for General Mills. “As a result of the survey, we are working to remove artificial flavors and colors from all of our cereals, and we are making great progress. Today, 90 percent of General Mills cereals do not contain artificial flavors or colors from artificial sources.”

Even when providing shoppers with what they want, for a category with a 90 percent household penetration rate, it can be difficult to really boost dollar sales. As such, according to Chicago-based IRI, ready-to-eat cereal sales at supermarkets, drugstores, mass retailers, military commissaries, and select club and dollar chains for the 52 weeks ended Aug. 4 were stagnant.  

There are segments that have fared well—particularly natural/organic, hot and value cereals. However, before retailers start pulling tried-and-true favorites from their shelves, observers say it is important to note that while natural/organic and some healthier options are doing well, they are still relatively small compared to mainstream offerings. 

For example, according to IRI, the top five selling cereals, not including private label, are Honey Nut Cheerios, Honey Bunches of Oats, Frosted Flakes, Cinnamon Toast Crunch and Cheerios. 

“Mainstream cereal continues to generate most of category sales,” says Jesse Garcia, senior vice president and chief customer officer for Post Consumer Brands, a business unit of Lakeville, Minn.-based Post Holdings. “That said, it is important to take a holistic view of the category and offer a broad portfolio of products, spanning all of these fast-growing segments, to align with consumer preference.” 

Post, a solid third in the cereal category (18 percent market share) behind giants General Mills and Kellogg’s (both around 30 percent), is increasing its investment in the category, which includes advertising and consumer promotion. “We are spending more in advertising and consumer support than we ever have in the past,” says Garcia. “In addition, we are making some exciting changes to our merchandising and packaging to improve consumer appeal and shop-ability.”

Like in the in ready-to-eat segment, there has been a shift toward hot cereal options with simple, healthy ingredients. According to Lance Archibald, president and CEO of Homestat Farm, the Dublin, Ohio-based maker of Maypo, hot cereal consumers now want high fiber and protein in their products, as well as low/no sugar, low/no sodium, vitamin and nutrient enrichment, and sustained energy throughout the day.

“The trend toward healthier lifestyles is exactly the reason why we are seeing the hot cereal category grow,” says Archibald. “Consumers perceive hot products as a healthier option when it comes to cereal. Furthermore, the category is seeing an increase in innovative ingredients—such as ancient grains—and the removal of artificial ingredients in favor of all-natural ones.” 

Staying in line with consumers’ desire for transparency, Maypo and Wheatena, another Homestat Farm brand, have both obtained non-GMO certification. Homestat Farm has also launched a new product, Maypo Instant Maple Oatmeal with Quinoa.

A Tiger’s Tale

Tony the Tiger has undergone a makeover. 

As part of the Kellogg Co. “Let You’re Gr-r-reat Out” program, which encourages tweens and dads to let their “greatness” shine, the iconic tiger has become more lively, says Christie Crouch, associate director at Kellogg’s for Frosted Flakes. 

“He is still going to look like the Tony everybody knows, he is still the Tony that has that great tiger prowess, if you will, but he is going to have the ability to talk and have facial expressions,” she says. “We partnered with the Jim Henson Creature Shop to create a more lively Tony.”

As part of the program, Kellogg’s, based in Battle Creek, Mich., will feature new TV advertising and a new digital approach with an increased

social media presence for Frosted Flakes. There is also new Frosted Flakes packaging in which Tony the Tiger will have a more prominent role. 

“Frosted Flakes is the No. 1 kids ready-to-eat cereal and third largest overall,” says Crouch. “It is important to keep the brand fresh to help drive growth. We are launching this new campaign in order to stay relevant with tweens and dads.”

“We may be a brand from the ‘50s, but that doesn’t mean we aren’t informed about the latest food trends,” says Archibald.