Simplifying Cereal

Evolving consumer preferences for simple ingredients has fueled change in the cereal aisle.   

A wave of change is making its way to the cereal aisle. Driven by consumers’ changing attitudes on health and wellness, as well as years of declining or flat sales, cereal manufacturers are finding ways to innovate the beloved pantry staple in an effort to stimulate sales into the category. 

While cereal has faced slumping sales in recent years, it still generates billions of dollars annually. Total cereal sales for the 52 weeks ended June 14 were $8.8 billion, according to Chicago-based IRI. Cereal is still the No. 1 choice for breakfast in the U.S., and it is found in 89 percent of U.S. households.

“Cereal has not lost its popularity or its relevance with consumers, and I believe there are ways we can reinvigorate this important category to make it even more appealing to consumers and profitable for retailers,” says Jesse Garcia, senior vice president of sales and chief customer officer for Post Consumer Brands, based in Lakeville, Minn.

Consumers’ perceptions about cereal have changed in recent years, say industry observers, which is fueling innovation from manufacturers—big and small. “Consumer attitudes on food have continued to evolve in the last several years,” says Lauren Pradhan, marketing manager for cereal at Minneapolis-based General Mills. “They are actively reading labels, seeking ingredients that are ‘pantry friendly’ and are looking for ways to incorporate more fresh foods into their diets.

“There are also a lot more options in the breakfast space with the increased desire for protein and fresh,” Pradhan adds. “This has led to an increased competitive environment for cereal.”

As the competition heats up for cereal manufacturers, consumers are also turning up the heat. Observers say that consumers want more transparency and authenticity from brands. “They want to know where the food comes from, what went into it and what values the manufacturer stands for,” says Pradhan. “That desire is changing how consumers decide what goes into their cart and what stays on the shelf.”

In an effort to keep General Mills cereals in shopping carts, the company has made some adjustments in its approach to renovation and innovation. Over the last few months, General Mills has committed to using cage-free eggs, reducing greenhouse gas emissions, and prioritizing wellness in new products and its existing portfolio, says Pradhan.

The company has also changed its five largest Cheerios brands to be gluten-free as a way to meet the changing dietary needs of consumers. “Renovating the five largest Cheerios brands to be gluten-free is the first step toward ensuring relevance and bringing new innovation in areas of interest,” Pradhan says. “So is our commitment to remove artificial flavors and colors from artificial sources from the rest of General Mills cereals. The first phase, including Reese’s Puffs and Trix, will start hitting the shelves in January.”

The Kellogg Company, the other major player in the cereal category, is also renovating its core offerings to give consumers the simple ingredients they desire. “We know that many consumers consider foods that have simple, recognizable ingredients as healthy today, and they want to know what is in their food,” says Noel Geoffroy, senior vice president of marketing and innovation at Kellogg Morning Foods, based in Battle Creek, Mich.

In North America, 75 percent of Kellogg’s cereals are made without artificial colors, and more than half are made without artificial flavors, says Geoffroy. “We’ve been working to remove artificial colors and flavors across Kellogg’s branded cereals,” he adds. “Our goal is to complete this transaction by the end of 2018.”

The company is also meeting consumer demand for simple ingredients with its latest product introductions, like its Kellogg’s Origins line. The collection of six items includes flake-based cereals, granolas and mueslis that combine ingredients like nuts, grains and fruits. The products are made without artificial flavors or hydrogenated oils.

Some manufacturers, like Eugene, Ore.-based Attune Foods, are taking transparency a step further by becoming certified organic or Non-GMO verified by third party organizations. Attune Foods recently made a commitment to make all of its brands—which includes Attune, Erewhon Organic, Uncle Sam, Peace Cereal, Sweet Home Farm, Willamette Valley Organic Granola Company and Golden Temple—USDA Organic Certified and/or Non-GMO Project Verified by the end of 2016.

The company recently launched a line of Non-GMO Verified granolas in carton sizes under its Peace Cereal brand. Coconut Craze Granola, which contains on-trend coconut, coconut oil and coconut sugar with crunchy oat cluster, is the flagship product.

“Attune Foods has been aggressive in launching new cereals and granolas that meet the current demands of consumers and that will continue,” says Rob Goluba, director of marketing. “Retailers can count on Attune Foods for great tasting new products that are Non-GMO and/or organic with clean labels that contain on-trend ingredients.”

In addition to holding brands to higher standards, consumers are also looking for convenience, observers say. “We’re seeing an uptick in products that meet needs for convenience, customization, and nourishment and satiation,” says Jen Anderson, brand manager for Tualatin, Ore.-based Pacific Foods. “Our ready-to-eat, organic steel-cut oatmeal was created to fuel customers on busy mornings, providing them a breakfast that is packed with protein, fiber and heart-healthy whole grains and prepared in less than two minutes.”

Pacific Foods, which also makes soups, broths and non-dairy beverages, is new to the cereal category. Its Steel-Cut Oatmeal is available in five heat-and-eat flavors—unsweetened, lightly sweetened, apple and cinnamon, maple and brown sugar, and oatmeal flax and chia power—offering ultimate convenience or the option to customize with sweet and savory ingredients, says Anderson.

“As consumers continue to evolve their perceptions of health and wellness, we anticipate the demand for nutrition to further into functionality, focusing on ingredients that play an even ‘bigger picture’ role in their lives, from digestibility to long-term brain health, and everything in between,” says Anderson.