Are consumers bored with cereal?
Category performance would seem to indicate so, with overall sales dollars down 2 percent at total U.S. food stores with sales of more than $2 million for the 52 weeks ending Nov. 19, 2016, according to Schaumburg, Ill.-based Nielsen. Even the sales dollars of hot cereal, that recent media darling, were down 1.9 percent during the same time period.
There’s one bright spot, however: Natural and granola-type cereals, which, Nielsen data show, experienced a sales dollar uptick of 4.8 percent.
Observing that “consumers are focusing on health, more so now than ever before, [because] they value life and family and want to ensure longevity and life’s rewards,” Dan Cabassa, CEO of Lake Success, N.Y.-based America’s Food Basket (AFB), advises fellow grocers: “Clearly market the benefits of healthy living. Tie in health-benefits promotions and educate the consumer. Increase variety and incentives to try new [items] so the consumer benefits from exploring. This ensures continuity in the segment, and, in some cases, the brand.”
Cabassa’s company, which operates stores in Connecticut, Massachusetts, New York and Rhode Island under such banners as America’s Food Basket, Ideal Food Basket and Ideal Market Place, has seen success with a similar strategy. “The AFB organization has partnered up with [wholesaler] United Natural Foods Inc. in order to increase the selection of products and increase the activity and exposure behind key brands,” he says. “As a result, our category same-store sales are up over 6 percent from the previous year.”
The current shopper emphasis on personal health aligns with other, more global concerns, he believes: “Consumers in this segment also have become more aware of environmental impacts and will look for more earth-friendly packaging which is also more informative on nutritional benefits.”
Natural and Healthy Offerings
Manufacturers concur that natural and better-for-you cereals are a high priority for shoppers. “According to a survey we conducted last year, we know that many consumers are looking to avoid artificial flavors and colors from artificial sources,” affirms Susanne Prucha, director of marketing for Cheerios, the iconic brand made by Minneapolis-based General Mills. “As a result, we are working to remove them from 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.”
The brand’s latest product, Very Berry Cheerios, featuring real strawberry, blueberry and raspberry fruit flakes, arrived last month on store shelves nationwide, following popular seasonal offerings Strawberry Cheerios and Pumpkin Spice Cheerios.
Among Battle Creek, Mich.-based Kellogg Co.’s new items in this segment are Raisin Bran Crunch Apple Strawberry, which puts “a sweet spin on heart-healthy bran,” and Special K Nourish granola in two “light and crispy” varieties, while even its recently launched Disney Princess cereal is “made with flavors and colors from natural sources.”
“We’re seeing that consumers are searching for cereals that are natural, organic, gluten-free, high in protein and lower in sugar, and several of our varieties fit these needs, including Puffins, Brown Rice Crisps, Multigrain Spoonfuls and Better Than Granola,” says Tim Kenny, director of marketing at Marlborough, Mass.-based Barbara’s. “Additionally, muesli for breakfast has become an emerging trend, helped by the popularity of overnight-oats recipes. Our Alpen line is perfect for consumers looking for that option.”
Also, last fall, the company brought back its popular limited-edition Pumpkin Puffins variety, which has only 5 grams of sugar per serving.
Regarding the 2016 rebranding of Barbara’s Better Granola line to Better Than Granola, Kenny explains that it “was inspired by overwhelming consumer feedback that Barbara’s granola blend offers more than a traditional granola, both in exceptional taste and nutritional benefits.”
Offering a larger serving size than many other comparable products, Better Than Granola blends toasted oat clusters and puffs, almonds, and ancient grains and seeds such as quinoa and flax seeds, and contains 6 grams of fiber and 9 to 10 grams of soy-free protein per serving.
In other news from the fashionable protein front, Kay’s Naturals’ cereals “provide per 34-gram serving — 1.2 ounces — 12 grams of protein,” according to Ann Jones Kazemzadeh, president of the Clara City, Minn.-based brand. “This is as much protein as three small eggs.”
That’s not all, however. Adds Kazemzadeh: We also provide 4 grams of fiber, which is as much fiber as an apple, but we only have 3 grams of sugar. There is not another … cereal on the market with this high protein and fiber and low sugar. It is a win-win for the consumer.” The products are also gluten-free.
That last attribute in particular is much on the mind of Bakery On Main, an East Hartford, Conn.-based manufacturer of hot and ready-to-eat cereals, along with granolas, granola bars and muesli that are all gluten-free, as well as offering other clean-label hallmarks. “Consumers want foods that are produced with higher-quality and better ingredients,” observes Bakery On Main founder and President Michael Smulders. “This need is generating increased interest in ancient grains, superfoods, superseeds, low-glycemic sweeteners, increased fiber and protein, as well as organic and non-GMO products.”
Health and product purity aren’t the only considerations, though. “Taste has always been, and continues to be, the No. 1 driver in the cereal category,” asserts Linda Fisher, director of corporate communications at Lakeville, Minn.-based Post Consumer Brands, whose newest product, line extension Cinnamon Pebbles, a crispy rice cereal, also launched in January.
For her part, Fisher is highly optimistic about the category’s long-term outlook, perhaps because, as she points out, Post “is the only cereal company to show growth in the category over the past 52 weeks. This is a result of our commitment to taste and our focus on marketing and merchandising fundamentals.
“We don’t believe cereal is boring, and retailers shouldn’t either,” she continues. “Breakfast food is a huge category, representing over $50 billion in sales, and is a significant business driver for retailers. Cereal is also the second-largest breakfast category behind fruit and one of the most economical breakfast options available to consumers. Additionally, research shows that when ready-to-eat cereals are in the grocery cart, the average cost of all groceries is $94.64, versus $46.54 when cereal is not in the cart — an increase of 103 percent, according to Nielsen Home Panel information. When shoppers stock up on their weekly must-haves, cereal is a go-to item that leads to additional purchases.”
More Ways to Go
To counter the cereal category’s current overall lack of momentum, AFB’s Cabassa points out that, as well as focusing on health, savvy supermarket operators “are exploring and offering an expanded selection of products and increasing promotional activity to deliver not only the products [shoppers] are looking for, but also at a value.” He further recommends “segmentation of the category in print and media.”
Additionally, for many cereal makers, selling strategies revolve around cereal’s versatility as an anytime snack or meal, or even as a recipe ingredient.
“We are seeing the trend of cereal being consumed at various times outside of breakfast,” notes General Mills’ Prucha. “It can be a snack, as well as a different dessert option, and we have some marketing that focuses on this.”
“We’ve received lots of interest from consumers about unique recipes that mix our cereals and other healthy foods to make great-tasting and nutritious snacks, so we’ve been incorporating more and more recipe-based content into our marketing strategies,” says Barbara’s Kenny.
Literally thinking outside the box is another smart move. “One of our best strategies with cereals is to offer them in single-serve bags,” observes Kazemzadeh. “This gives the customer a chance to try the product at low cost. Once they become fans, they switch to the larger box.” Additionally, Kay’s has updated its packaging to make it “fresher and more appealing,” she explains.
Despite her upbeat view of the category, Fisher believes grocers can still increase their odds of spectacular sales. “To be successful in cereal, smart retailers will seek to optimize their shelf sets to ‘fix the mix’ for their consumers and their neighborhoods, and provide the right products at competitive and everyday promotional prices,” she notes. “As the only major cereal company 100 percent vested in cereal, Post Consumer Brands is increasing investment in the category, including advertising and consumer promotions on our core best-selling brands. We’re also making changes to our merchandising and packaging to improve consumer appeal and shopability. With the broadest portfolio of cereals spanning all segments of the category, we’re uniquely positioned to help [grocers] create the mix that works for each of our customers.”
New and Exciting
Speaking of cereal offerings, Cabassa suggests that retailers adopt “innovative product introduction,” since, as he asserts, “innovation is the constant which keeps consumers engaged in the product.”
In an effort “to bring the category back to growth,” Prucha also stresses new product development: “It is important to bring news to the cereal aisle, and we have focused on product innovation and renovation to keep the category relevant.”
Fisher, too, agrees on the importance of new products, observing: “We believe the key to successful innovation that will actually grow the category is to offer the right product at the right price for the right consumer. … Because taste is king in the cereal aisle, we’ll continue to invest in taste improvements across our portfolio where it makes sense and will increase consumer appeal.”
Even with all of the emphasis on novelty, however, a large contingent of shoppers will always want their old standbys close at hand. Cabassa acknowledges that, for many consumers, “there is nothing better than just dropping back to your favorite [cereal]. That’s what makes us all unique.”