How Kellogg’s Italian Takeover Could Revive Declining Breakfast Cereal Sales

Breakfast cereal is facing tough times. Sales in the U.S. have been dropping for decades. Recent news of Ferrero Group planning to buy WK Kellogg has brought this issue back to the forefront.

Despite a slight boost during the pandemic—when many people had the time to enjoy a bowl of cereal—sales have fallen steadily for over 25 years. Nielsen IQ data shows Americans bought about 2.5 billion boxes of cereal in 2021, but in the most recent year, that number dropped to 2.1 billion, a decline of over 13%.

Why the decline? First, there are new breakfast options like Nutri-Grain bars and Clif Bars, which have made breakfast on the go much easier. Many consumers are also wary of processed foods and sugar. For instance, just one cup of Lucky Charms contains 24% of the daily recommended sugar intake.

Tom Rees, a food industry expert, points out that cereal struggles because it doesn’t appear natural. For years, cereal makers tried to improve health perceptions by adding vitamins. However, today’s consumers prefer simple ingredient lists. Concerns about artificial dyes, like those used in Froot Loops, have also led to calls for change. Activists even protested at Kellogg’s headquarters, prompting promises to phase out these dyes.

Breakfast has evolved, too. Yogurt and smoothies are now common, and even cereal is being seen differently. Recent research by YouGov highlights that Generation Z, those born from 1997 to 2007, often opts for a breakfast of vegetables instead of traditional fare.

Kenton Barello from YouGov notes that while Gen Z is eating breakfast less frequently, they are still buying cereal, perhaps as a snack.

This shift in eating habits has significant implications. In 2023, Kellogg split into two companies, with WK Kellogg focusing primarily on cereals. The need for innovation became clear when Mars Inc. announced plans to acquire Kellogg’s snack brands for over $30 billion. This indicates a movement toward rejuvenating the cereal market.

Experts suggest that there is still hope for cereals. New products, like Kellogg’s Mashups, mix beloved flavors and could attract younger consumers. The future may require cereal brands to cater to a wider range of preferences, from sweet to health-focused options.

Analyst Julia Mills believes that with fewer children in the U.S., marketers might shift toward appealing to adult tastes. Some niche brands are already doing this, offering cereals high in fiber or protein.

Jeffrey Harmening, CEO of General Mills, highlighted how the company responded to consumer demand by launching high-protein Cheerios. This shows that even legacy brands can adapt.

Cereal may be struggling now, but with creativity and market adaptations, it has the potential to find a new place in consumers’ diets. For more insights into this evolving market, you can check out Nielsen IQ report for fresh data and trends.

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