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“It’s no secret the cereal business is going through some challenges,” says Tony Shurman, general manager at Parsippany, N.J.-based Post Foods LLC, and recent sales figures for the ready-to-eat (RTE) segment bear him out: According to Schaumburg, Ill.-based Nielsen, sales dollars of such products slid 6.1 percent for the 52 weeks ending Nov. 22, 2014.
Still, despite a serious challenge from the growing hot-cereal segment, “RTE cereal remains the No. 1 choice for breakfast for myriad reasons, including its convenience and value for price,” asserts Darren Mahaffy, VP marketing at Richmond, British Columbia-based Nature’s Path Foods. “That said, conventional cereals are declining, while organic options continue to surge as consumers look for more nutritional value, and have become more aware of what’s in their food. An increasing number of shoppers are looking to avoid GMOs, pesticides or artificial ingredients, and the data clearly reflects this shift to better-for-you cereals.”
That means that those who like their breakfast straight from the box — or, increasingly, the resealable bag — have been increasingly gravitating toward granola and other “natural-type” cereals, sales of which leapt up by an impressive 12.7 percent during the previously mentioned time period tracked by Nielsen. Nature’s Path’s most recent contributions to the segment are four gluten-free organic SKUs introduced in 2014, two apiece under the EnviroKidz and Crunchy Sunrise brands. “Gluten-free is still key, macro nutrient benefits such as high fiber and protein for long-lasting satiety will remain a strong focus, and sprouted grains are really taking off right now,” observes Mahaffy “Chia seeds, ancient grains and coconut are still hot ingredients.”
“Consumers are looking for convenient, healthy, nutrient-dense food options,” affirms Leslie Sabino, senior business manager, cereal category, and supplier management lead at Stamford, Conn.-based Daymon Worldwide. “Cereal is an affordable part of consumers’ breakfast routine, while it also caters to the health-conscious side of their busy lives.”
Of course, along with all of that, it’s got to be delicious, too. “Kids are the largest consumer of cereal, and parents know that if a cereal doesn’t taste good their kids won’t eat it,” notes Amanda Madrid, senior buyer at Bentonville, Ark.-based Wal-Mart Stores Inc. Among the mega-retailer’s private label offerings, “we’ve seen our customers really enjoy our Great Value line, including the brand’s Sugar Frosted Flakes, Honey Nut Spins and Fruit Spins cereals,” she adds.
Another key to keeping consumers engaged with the category is coming up with exciting items, as well as inventive ways to sell them. “Consumers are always looking for new and better products that will fit their needs,” says Alex Cabrera, category director at Anaheim, Calif.-based Northgate Gonzalez Markets, whose 42 stores cater primarily to Hispanic shoppers. “Innovation always drives customer interest,” echoes Madrid.
Post certainly excels at product innovation, which has helped it to “significantly [outperform] the category on the whole,” says Shurman. “Our success has been driven by a combination of better execution, stronger demand generation, and a concerted and consistent effort to enhance product quality to delight consumers.”
Among the company’s “great lineup,” he notes: “We’ve expanded the Grape-Nuts line with new Grape-Nuts Fit granola, and added Post Shredded Wheat Crunch to our traditional ready-to-eat cereal lineup. … Additionally, a number of our cold cereals now have third-party non-GMO verification through the Non-GMO Project.”
“We’re putting our consumers at the center of our new product innovation by rapidly addressing evolving food trends and investing in areas that our consumers value, including added protein, gluten-free and products made with simple ingredients,” says Camille Gibson, VP of marketing for the Big G division of Minneapolis-based General Mills, whose U.S. cereal sales continue to outperform the category. Recent introductions from the company include Cheerios + Ancient Grains, Cascadian Farm Protein Granola and French Toast Crunch.
Shaking Up the Category
When it comes to selling product, “Post works to reach consumers and offer value both in and out of store,” observes Shurman. “In store Post’s strong efforts to align aggressive promotional pricing with strong display have led to [our] having one of the strongest lifts of any manufacturer in the category.”
Going forward, “we see significant opportunities for packaging innovation, enhanced nutritionals, freshness [and] leaner/higher-protein items, as well as unique grain and flavor combinations,” he says.
Meanwhile, the manufacturer’s marketing efforts aim “to shake up the cereal category,” he says, pointing to a recent Post Shredded Wheat campaign that played up the cereal’s heart-healthy attributes through an integration with the popular TV game show “Wheel of Fortune.”
“For Grape-Nuts, a brand popular with outdoor enthusiasts and thrill seekers, we’ve headed to Antarctica and brought our consumers along for the ride through a dynamic social media campaign,” adds Shurman. “On the Pebbles brand, we’ve enlisted tween- and teen-friendly celebrities to help create a little fun competition between our Fruity and Cocoa varieties. Cereal is something everyone knows and loves, and Post is honing in on our key consumers to reach the right audiences at the right times.”
“Our sales and marketing teams work together year-round to ensure successful execution of programs and promotions across all categories,” says Mahaffy, of Nature’s Path. “We analyze regional data in each channel across our business and other brands to ensure we are competitive and to maximize return on investment. We recently executed a consumer display program under our EnviroKidz brand which allowed consumers the chance to win an EcoTrip to Costa Rica. The program built consumer offtake and brought new shoppers to the RTE category.”
The Hispanic Factor
At retail, Northgate’s Cabrera attributes his company’s positive cereal sales for the past three years to a combination of “aggressive pricing, increased ad activity, innovation and promotion,” along with an expanded better-for-you selection and product itemization.
He advises, however, that as well as addressing such concerns as health, convenience and value, those that want to grow the “struggling” category “need to market more to the Hispanic customer. This is the fastest-growing segment of our market, but they do not consume cereals for breakfast as much as other segments of the market; they prefer other foods.”
With Hispanics’ help, RTE cereal can break new ground in flavors and presentation, lifting itself out of its present doldrums and maintaining a robust presence on supermarket shelves for years to come.
“Cereal is something everyone knows and loves, and Post is honing in on our key consumers to reach the right audiences at the right times.”
—Tony Shurman, Post Foods LLC