Marketing

Mikey Doesn't Like It: How Cereal Is Missing the Breakfast Boom


Sales of cold cereal continue to decline in the U.S. General Mills’ (GIS) earnings fell short of forecasts in June, and just last month Kellogg (K) missed second-quarter sales estimates and cut its near-term forecasts.

This doesn’t mean Americans have given up on the morning meal. In fact, the reverse is true. According to Nielsen (NLSN) data, breakfast on the whole is growing. And while cold cereal, an $8.5 billion industry, is still the biggest breakfast category overall, egg sandwiches, sausages, cereal bars, and pastries are catching up.

What’s driving these changes? Over the past five years, people have stopped caring quite so much about fiber, but there’s new interest in protein, with 54 percent identifying protein as something they care about, up from 49 percent in 2009. Meanwhile, other health crazes have taken hold. Interest in nongenetically modified foods rose 67 percent in the past five years, according to Nielsen; interest in gluten-free foods, and those without high-fructose corn syrup, is up 22 percent for both categories. Enter the gluten-free, unsweetened, high-protein, non-GMO egg.

Some of these trends may be explained by breakfast’s new gravitas. Since 2004, the fraction of people who say that breakfast is the most important meal of the day has risen from 54 percent to 58 percent. But while breakfast eaters think the meal is important, that doesn’t mean they have a lot of time for it. Sitting down with a bowl of cereal and milk eats into already hurried mornings; granola bars and toasted pastries, on the other hand, can be inhaled on the go.

Even Big Cereal knows its future lies outside the box. “We expect to grow share in the U.S. cereal category through significant product innovation,” General Mills said in its annual report, citing yogurt and snacks as new areas of focus. Everyone still wants breakfast—they just don’t want cereal.

Eric-chemi
Chemi is head of research for Businessweek and Bloomberg TV.
Amado is a designer.
Hasto is an art director for Bloomberg Businessweek.

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Companies Mentioned

  • GIS
    (General Mills Inc)
    • $54.31 USD
    • -0.10
    • -0.18%
  • K
    (Kellogg Co)
    • $67.02 USD
    • -0.22
    • -0.33%
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