Soup-To-Nuts Podcast: What will it take to reawaken sleepy cereal sales?

18-May-2018 - Last updated on 18-May-2018 at 13:23 GMT

For years ready-to-eat cereal has suffered sleepy sales and battled nightmarish consumer perceptions around poor nutrition and lack of convenience, but several natural and organic manufacturers are hoping the reawaken the category with better-for-you options and on-the-go innovations.

According to Statista, ready-to-eat cereal sales in the US have steadily fallen from $9.22 billion in 2014 to $8.91 billion in 2015 and on down to $8.66 billion last year in 2017. Euromonitor International attributes this decline in part to consumers’ busier lives and a growing preference for on-the-go options such as biscuits and bars. Cereal also has taken heat for high sugar content and including artificial colors and flavors.

Unfortunately, Euromonitor doesn’t see these pressures – or the decline they are inflicting on cereal sales – easing up anytime soon. It predicts that retail sales of breakfast cereals will fall 5% between 2017 and 2022, and value sales will fall 7% in the same period to reach $9.8 billion.

Despite these discouraging numbers two giants in the organic and natural cereal segment -- Nature’s Path and Kashi – think they can bring cereal back. In this episode of FoodNavigator-USA’s Soup-to-Nuts Podcast, representatives from both companies discuss new product launches and marketing strategies that they think will breathe new life into the category.

Nature’s Path bets on bold innovations to boost nutrition

According to Roy Tam, the senior director of research, development and innovation at Nature’s Path, if industry wants to see a big change it needs to take a big risk and innovate boldly, which is exactly what Nature’s Path is doing with its latest launch of superfood cereals: Golden Turmeric and Purple BAM!

“You gotta be able to able to make cereal sexy again, and how do we do that? We do that by being first to market and we do it by being a little bit risky,” Tam told FoodNavigator-USA.

For example, he explained that the company’s new Golden Turmeric Cereal is banking in part on the popularity of golden milk, which blends turmeric and other spices with coconut or other plant-based or dairy milks for a functional beverage.

“Golden milk is very popular…. And the idea here is to be able to provide you the golden milk in your cereal when you put your milk or milk alternative into it, the seasonings on the flakes leech out into the milk. And then you have your ancient grain corn flake that you can eat and feel satiated, and then you are going to drink your golden milk afterwards. How fantastic is that?” he said.

The same idea applies to Purple BAM! which blends baobab, acai and maqui powders on crunchy flakes to boost the fiber and antioxidant content of the cereal, as well as make a fun and engaging purple milk.

For both of these launches color plays a big role in grabbing consumers attention – and while the colors are natural, the move could be seen as risky given the criticism cereal has faced for its heavy reliance on artificial colors to capture early risers’ imaginations.

Robin Bondy, Nature’s Path’s communications manager understands this and notes that by using natural colors consumers can have the fun they expect from cereal, but without sacrificing their quality standards.

Out with the old and in with the new

She also said understands that one reason parents turned away from children’s cereal is because they can be overloaded with sugar – which is why she says Nature’s Path recently reformulated its Amazon Flakes to be under 8 grams of sugar per serving.

Along with the reformulation, Nature’s Path recently rebranded its Amazon Flakes and EnviroKids cereals to better all out the nutrition information parents’ want and make the products more appealing to kids when they are on the shelf next to iconic cartoon characters on competing brands’ cereals.

The jewel and neon colored boxes feature endangered animals that will appeal to children while new call-outs on the box for organic, no artificial colors or preservatives and gluten-free will appeal to parents.

Making cereal convenient

As for the notion that cereal isn’t convenient or the idea that millennials won’t eat it because they don’t want to deal with a bowl and milk, Bondy says Nature’s Path has solutions for that as well.

She explains that millennials want organic options, which until recently have been limited in the cereal segment. But by offering organic choices, Nature’s Path hopes to lure them back.

“Another trend that we are seeing with millennials is they are snacking. So, sometimes when we are showing our Golden Turmeric cereal if we are not putting it in milk … we will add it to a trail mix or something you can take on the go,” Bondy said.

“The other thing that we have done is we have switched some of our packaging to a pouch format … that can be resealed because we find people are eating it in their car and they are eating it on the go,” she added.

Finally, she said, the company also launched last year breakfast biscuits so that when there isn’t time for cereal, Nature’s Path can still provide a solution to consumers as they are running out the door in the morning or hustling between activities throughout the day.

Kashi’s new products tackle nutrition, convenience

Kashi also still believes in the potential of cereal and, like Nature’s Path, is trying to reenergize the category by addressing consumers’ concerns about nutrition by offering new products that are better for them as well as the planet.

The first new cereal is peanut butter Go Lean cereal, which Megan Hagist of Kashi’s marketing team says is “packed with positive nutrition, like 10 grams of protein and 6 grams of fiber.”

The second is a Cinnamon French Toast, which has “a really nice level of sweetness to it with only 6 grams of sugar,” and is Kashi’s second Certified Transitional cereal, Hagist said.

She explained Kashi’s Certified Transitional program, pays farmers a slight premium for their crops while they are going through the three-year organic certification period. This period can be financially difficult for farmers as they often see a drop in yield when they move from conventional to organic farming techniques, yet they don’t qualify for the higher premium that certified organic demands. This gap can discourage some farmers for moving to organic, and Kashi is hoping to remove this barrier so that more land is converted.

While Kashi believes in cereal, it also recognizes consumers’ need for more on-the-go breakfast options, which is why it recently expanded its line of Certified Transitional breakfast bars with the launch of four new chewy nut butter bars for a total of six.

While many of the flavors and attributes of these new products are on-trend, only time will tell if they are enough to revitalize cereal and inspire other brands to revamp their offerings to match consumers’ evolving wellness demands.