Breakfast Cereals in the United States
A mix of cultural, culinary and demographic trends has led to a weakness in the U.S. breakfast cereal market. As snacking has increasingly become the norm instead of sit down meals, on-the-go or away-from-home breakfast has become the norm for Americans. So consumers are increasingly turning away from breakfast cereal and instead embracing alternatives such as cereal bars, bagels and yogurt.
Yet there still remains hope for breakfast cereal marketers. Although retail sales for cold cereal were down in 2013, hot cereal registered a noticeable increase in sales as major marketers in the breakfast cereal industry intensified their efforts to return cereal to the breakfast table at home and to expand its presence at breakfast occasions away from home. Senior executives from major breakfast cereal marketers continue to express the firm conviction that they are on the right path to revive the cereal businesses.
In Breakfast Cereals in the United States the obstacles facing U.S. marketers of breakfast cereal are examined in addition to the opportunities still offered by American consumers. Although the connection between Americans and their breakfast cereals may be strained, Packaged Facts survey data highlighted in the report indicate that it remains unbroken. Three in four adults eat cold cereal and more than 60% eat hot cereal. Three in five cold cereal eaters and two in five hot cereal eaters consume cereal daily or a few times a week. Moreover, Americans eat still breakfast cereal morning noon, and night with a surprising 40% of cereal consumers eating it as an evening or late-night meal or snack. Two in five cold cereal eaters consume cold cereal as a snack right out of the box, while 15% mix it with other ingredients to make their own customized snack mix.
This Packaged Facts report highlights the key suggestions that show that breakfast cereal still represents a handy, convenient and satisfying meal or snack for millions of adults and fits well into the eating habits of today’s American consumer. It also demonstrates that the challenge for cereal marketers is not only to leverage the traditional bond with breakfast cereal but also to offer innovative, trendy cereal products that suit the diverse tastes and eating habits of today’s cereal consumers.
Scope and Methodology
Breakfast Cereals in the United States analyzes the U.S. market for cold, or ready-to-eat, breakfast cereal and hot breakfast cereal. This report pinpoints some of the emerging cereal trends that are shaping the market; identifies the key opportunities in the market for breakfast cereals; provides an estimate of U.S. retail sales of cold and hot breakfast cereals for the 2008 through 2013 and forecasts U.S. retail sales through 2018; analyzes the strategies of major competitors in the market; identifies marketing and new cereal product trends; and provides an in-depth look at the tastes and preferences of today’s breakfast cereal consumers.
The consumer data in this report was gathered from two sources. The first is a Packaged Facts national online consumer survey conducted in January/February 2014, which reflects a panel of 2,000 U.S. adults (age 18+) that is balanced to the national population on the primary demographic measures of gender, age bracket, race/ethnicity, geographic region, marital status, presence or absence of children in the household and household income. The second is the Simmons National Consumer Survey for Summer 2013 (and Spring 2004 in the case of 10-year-trend tables and figures) from Experian Marketing Services. On an ongoing basis, Experian Marketing Services conducts booklet-based surveys of a large and random sample of consumers (approximately 25,000 for each 12-month survey compilation) who in aggregate represent a statistically accurate cross-section of the U.S. population.
The retail sales figures are from IRI (Chicago, IL), which are based on IRI aggregated multi-outlet (MULO) sales tracking, which represents sales through U.S. supermarkets, drugstores (including Walgreens, CVS, and Rite Aid), mass merchandisers (Walmart, Target, Kmart, and Shopko), warehouse clubs (Sam’s Club and BJ’s, but excluding Costco), dollar stores (excluding Dollar Tree), and military commissaries.
The report is also based upon data collected from field surveys of food retailers in various channels as well as a wide range of industry sources, including company websites, trade publications, business newspapers and magazines, consumer blogs, and annual reports, 10Ks and other releases from public companies.
Market Insights: A Selection From The Report
“Free-From” Food Trend Hits Breakfast Cereal Market One overarching culinary trend that has begun to heavily influence the breakfast cereal market is the fact that food marketers increasingly define “good-for-you” as “not including ingredients that are bad for you.” These include gluten, genetically modified organisms (GMOs) and animal-derived ingredients (vegan).
With the exception of Post Foods, which began to reformulate its Chex brand into gluten-free products in 2008, major marketers have not yet made a significant effort to launch gluten-free cereals. According to one analysis, smaller food manufacturers have a competitive advantage in the production of gluten-free foods because they do not have “legacy processing plants laden with traces of gluten” (The New York Times, February 17, 2014).
Major marketers of breakfast cereal have more opportunities in competing in the non-GMO field, and they all have begun a sustained campaign to offer some of their flagship brands in non-GMO varieties. For example, General Mills made a splash with the announcement that the Original Cheerios brand would be manufactured with non-GMO ingredients and Post Foods soon followed suit with the news that its Grape-Nuts brand would be marketed as a non-GMO product. Kellogg Company has informed consumers that Kashi GOLEAN cereals will be non-GMO Project Verified by the end of 2014.
Paradoxically, however, these efforts may not necessarily result in a direct and noticeable impact on retail sales, although they may have a broad positive impact on consumers’ perceptions of corporate images and brands. According to Packaged Facts’ January/February 2014 consumer survey, when buying a cold breakfast cereal only a small percentage of cereal purchasers assign a high level of importance to whether the product is non-GMO (7%), or gluten-free (5%). A much higher percentage of cereal buyers are impressed by more traditional healthy-ingredient claims such as no/low sugar (19%), vitamin-fortified (15%), high protein (15%), low calorie (13%) and low sodium (12%).
Latinos Are the Comeback Kids for Breakfast Cereal Market
While American consumers continue to believe that breakfast is the "most important meal of the day," they increasingly favor alternatives to breakfast cereal in a bowl. Between 2004 and 2013 the number of households using cereal bars and chewy granola bars increased more than 35%, while the number of households using cold and hot cereals failed to keep up with overall household growth. Yet a return to strength is anticipated for the $12 billion breakfast cereal market, and Latino consumers are expected to play an important role in the turnaround, according to Breakfast Cereals in the United States, a just-released report by market research publisher Packaged Facts.
Cereal marketers will benefit from the increasing demographic clout of Latino consumers, notes Packaged Facts research director David Sprinkle. While the kids population as a whole will decline in the coming years, there will be substantial growth in the population of Latinos under 14. Presently, Latinos account for one in four of those under the age of 14. And in states such as California and Texas, Latino kids are in the majority in this age group.
Regardless of whether they have children in their homes, Hispanic households are more likely than non-Hispanic households to have consumed 21 or more servings of cold breakfast cereal in the last 30 days, according to the report. Roughly 39% of Hispanic households with children consumed 21 or more servings of cold breakfast cereal, compared to only 33% of non-Hispanic households with children. Hispanic households without children are nearly twice as likely as their non-Hispanic counterparts to have consumed this volume of cold cereal in the past 30 days (23% vs. 12%).
Other trends encouraging growth include increasing investment by major marketers in innovative products; more effective merchandising and marketing campaigns; increasing cereal consumption among aging Boomers coupled with a relatively stable (at least in the short term) kids population; and the continuation of America's love affair with breakfast cereal morning, noon and night. Packaged Facts anticipates that these factors will combine to overcome the potential drag of competition from other types of on-the-go breakfast food and expects the market for cold and hot breakfast cereals will begin to turn the corner in 2014. The breakfast cereal market will experience cumulative growth of 10% during the 2014-2018 forecast period and will reach $13 billion in 2018.
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