H14 2019 CENTER STORE HANDBOOK WINSIGHT GROCERY BUSINESS
New eating occasions
and new products are
the operative words for
this nostalgic, snack-centric category.
By Kathleen Furore
Retailers who’ve toyed with dialing back efforts to boost traffic to the cereal aisle should give that idea a bit more thought. While the category has, as Love Grown Foods CEO Lance Palumbo says, “been in decline for a decade because of negative connotations around sugar,” it remains a substantial one. The size of the global breakfast cereal mar- ket was valued at $37.44 billion in 2016 and is
projected to expand at a compound annual growth rate of
4.3% from 2017 to 2025, according to a report from San
Francisco-based Grand View Research on the breakfast
The good news for grocers? In 2016, the supermarket
channel dominated the breakfast cereal market and is
expected to maintain its dominance until 2025.
The growing popularity of on-the-go breakfasts, surging
demand for organic cereals and rising health awareness
among consumers are accelerating market growth, Grand
View Research reveals.
While lightly sweetened cereal remains consumers’
most popular choice, interest in healthy cereal is rising. Compared to last year, consumers are eating more
ancient grains-based cereal, muesli, granola and high-fiber varieties, according to London-based Mintel’s Hot
and Cold Cereal—U.S. September 2017 report.
“Organic, non-GMO, gluten-free and other cereals that
deliver on a specific need are growing,” says Palumbo.
“We’re also seeing more fortification with protein from
various sources, added fiber and even probiotics for digestion,” as well as strong growth in granola.
Consumers’ penchant for snacking also is fueling
cereal sales, according to Mintel, which finds snacking
ranks second only to breakfast as the most common reason consumers say they eat cereal.
“Morning snacking is the fastest-growing snacking
occasion,” says Scott Baldwin, director of marketing for
Minneapolis-based General Mills cereals, who points out
that cereal is also popular as an at-the-office, after-school
and late-night snack.
Another interesting twist? Hot cereals are expected
to register the fastest growth during the forecast period,
according to Grand View Research, which found that
increased adoption of nutritious breakfast meal options
“is spurring the demand for multigrain cereals, including
grains, seeds and beans. Vast benefits of including these
organic and whole grain-based cereals in the diet are further escalating the demand for hot cereals.”
While all mature center store categories have faced challenges, Roxanne Bernstein, chief marketing officer of St.
Louis-based Post Consumer Brands, says the company’s
research offers a different perspective.
“The number of households purchasing breakfast
cereal is holding relatively constant, at roughly nine out
of 10 households,” Bernstein says. “Further, for those
consumers who are varying their morning breakfast rou-
tine, the vast majority are not doing so out of any desire to
leave cereal. In fact, for those buying less, they are largely
unaware that their purchasing behavior has changed.”
The fact is that consumers want cereal: As Palumbo
points out, the category’s household penetration is more
than 90%. In turn, manufacturers and retailers must offer
the kinds of products that deliver the nutritional profiles
and taste consumers seek.
“There are three key things we hear that consumers
expect from cereal, and we make sure to deliver on them,”
including taste, value and nostalgia, says Baldwin of General Mills.
“Taste is king, my kids have to like eating it, and cereal
needs to be a great value for breakfast,” says Baldwin.
“We also know that nostalgia with cereal is alive and well.