R.-T.-E. cereal combats weakness
The ready-to-eat cereal category struggled to find its footing throughout much of 2017, as dollar sales in the category fell 2.2% to $8,564 million in the 52 weeks ended July 9, according to I.R.I. Industry leaders General Mills, Inc. and Kellogg Co. sustained dollar sales declines of 3.7% and 2.6%, respectively, during the period, while private label fell 6%, according to I.R.I.
To combat weakness in the “adult health-oriented segment,” which is dragging down the R.-T.-E. cereal category, Kellogg is planning to launch cereal innovation geared toward gut health.
“What encourages me as I look forward in where science and nutrition is going and where the trends are, clearly what is big and right in front of us now and I think will be really important is gut health and the gut-brain connection, the importance of the microbiome and the importance of fiber coming back into people’s diets, either prebiotic or probiotic benefits,” Paul Norman, senior vice-president and president of Kellogg North America, said during an Aug. 3 conference call with analysts. “Those things, considering 9 out of 10 Americans don’t get enough fiber today, I think are going to position our category extremely well to grow as we go forward.”
At General Mills, executives said the company is ready to battle for breakfast consumption share. The company plans to leverage wellness and taste on its biggest cereal brands in fiscal 2018.
General Mills will roll out a limited-edition Banana Nut variety of Cheerios that will feature the taste of banana bread.
Some General Mills’ cereal brands have had success, though. Cinnamon Toast Crunch registered a compound annual growth rate of 6% in retail sales over the past four years. Apple cinnamon, blueberry and strawberry varieties will join the Cinnamon Toast Crunch portfolio. Lucky Charms posted 3% retail sales growth in the past fiscal year as General Mills emphasized the marshmallows in the product.
Meanwhile, at Post Holdings, Malt-O-Meal bagged cereal and Pebbles have been a positive over the past year. The company also benefited from the introduction of two new license products: Oreo O’s and Honey Maid S’mores.