Lamine Lahouasnia, head of packaged food research at Euromonitor, wrote in a recent blog post that center aisle foods, such as cereal, have gained a reputation as “high sugar, low nutrition."
This has meant a 19% drop in the amount of cereal per year purchased on average by US consumers, from 5.6kg (12.3 lbs) in 2005 to 4.5kg (9.9 lbs) in 2015.
“If the [processed food] industry can successfully change the consumer mindset or the consumers’ perception of the foods in the center aisles, there’s definitely the possibility of returning to growth, with some categories gaining more than others,” Lahouasnia told BakeryandSnacks.
Marketing and innovation needed
Kellogg and General Mills have both recently made headlines by promising to reduce artificial flavors and colors over the next few years.
However, it will take a concerted effort from both marketing and innovation to change the market perception, according to Lahouasnia.
“You need to come up with products that appeal to changing consumer, but equally is what has changed and how that fits into the new consumer lifestyles,” he said.
“Yes you can change the marketing, but fundamentally you have to change the product. That’s no easy feat … When you take out anything and replace it with something else, you’ll fundamentally alter the taste and visual element of food.”
One example he gave was Campbell’s Soup, which lowered 25% of the sodium from their soup in 2009 and almost immediately started seeing sales decline significantly.
Consumers just were not ready for the change of the product on their pallet, he said.
Getting traffic back
To get traffic back in the center aisles, Lahouasnia said companies will need to address the US preference for a higher protein diet and the current “fear of sugar” many consumers have.
For large companies like General Mills and Kellogg, this could mean adding and removing brands from their portfolios.
Especially given how popular items such as muesli, granola and hot cereal are becoming, top companies will need to find growing markets adjust their portfolio to meet consumer demand quickly.
“Given the huge volume of sales in this particular item, even small changes to portfolio will yield quite good results,” he said of the cereal market. “Is it going to be enough to fundamentally change the direction of breakfast cereal? No. Not at the moment.”
Cereal’s Great Depression
Breakfast cereals are poised to lose about $1bn from 2015 to 2020, according to Lahouasnia’s blog post.
Asked if this was akin to cereal’s own Great Depression, he said the big difference he sees is that the world economy eventually recovered; he is not sure the breakfast cereal market ever will.
“The Great Depression? Yes,” he said. “Whether we’re going to get out? I’m not sure if there will be a comeback.”
While a westernized way of eating has settled into countries like Brazil and China, breakfast cereals haven’t become commonplace there yet, even though sales are up. Lahouasnia said he does not see Kellogg, or any other breakfast food company for that matter, being able to offset these down years in the near future.
In the US, healthy cereals such as Kellogg’s Special K may see somewhat of a rebound with rebranding away from being a diet cereal and toward being a healthy cereal.
Even so, Lahouasnia still believes it will take Kellogg and companies in similar position changing “their makeup” beyond a single brand to become more naturally healthy. This may be what helps center aisles make something of a comeback.
From meals to snacks
A fundamental problem, Lahouasnia said, is that many see breakfast cereals as a meal in and of itself. However, people are moving away from sitting down at breakfast and gravitating toward morning snacks.
“It’s just not good enough to have it something 40% of your daily sugar intake in a single serving,” he said of breakfast cereal. “Fundamentally, breakfast cereals need to be changed in the mindset of the US consumers, particularly younger people who are skeptical of what it does for them, if anything.”
“Success [in the center aisles]? We’ll probably see a greater uptake of cereal consumption by that particular age group,” he said. “That would be a good indicator of success. But, like I said, I’m not crossing my fingers.”