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US: Cereals continue their struggle in the breakfast market

Cereal, that bedrock of the American breakfast, has lost some of its snap, crackle and pop.

For the last decade, the cereal business has been declining, as consumers reach for granola bars, yoghurt and drive-through fare in the morning. And the drop-off has accelerated lately, especially among those finicky millennials who tend to graze on healthy options — even if Cheerios and some other brands come in whole-grain varieties fortified with protein now.

As a child, Adam Feuerstein started his day with a homemade breakfast. “Growing up, I would combine Frosted Flakes and Cap’n Crunch,” said Mr. Feuerstein, a financial reporter at The Street. “I have such vivid memories of it that if I walk down the cereal aisle today, I still gravitate toward those cereals.”

Cereal companies have tried to play on that nostalgia, with commercials featuring generations of Cheerio eaters or couples fighting over the marshmallows in Lucky Charms.

But Feuerstein, who is 46, isn’t buying the sales pitch. These days, he eats breakfast around 10 or 11 in the morning, preferring juice he makes himself. If he eats cereal at all, it is a Trader Joe’s private label version “as a treat,” he said.
“You realise that it’s just a sugar delivery vehicle,” he said of cereal. “We’ve all gotten a little smarter about the foods we eat, and while there are plenty of healthy cereals out there, I just don’t choose to eat much cereal.”

Cereal consumption peaked in the mid-1990s, according to the NPD Group, a consumer research firm. Still, some 90 percent of American households report buying ready-to-eat cereal, which remains the largest category of breakfast food with some $10 billion in sales last year, according to Euromonitor, down from $13.9 billion in 2000. And the consumer research firm estimates sales will fall further this year to $9.7 billion.

“More and more consumers are eating breakfast,” said Noel Geoffroy, senior vice president for morning foods marketing and innovation at the Kellogg Company. “The absolute market is growing — and along with that, so are the choices of what consumers eat for breakfast.”

Cereal sales have long been subject to dips brought on by food fads like the Atkins diet or bagel mania. And many cereals are neither gluten-free nor protein-rich, so they fail to resonate with the growing number of consumers who are gluten-intolerant or adherents of the so-called paleo diet.

But investment analysts say the current slump is a result of more pernicious trends. “The common observation by a lot of companies facing declining cereal sales is that this is a kind of death by a thousand cuts,” said Nicholas Fereday, an investment analyst specialising in food and agriculture at Rabobank and author of a report, “The Cereal Killers: Five Trends Revolutionizing the American Breakfast.” “This is frustrating for food companies because they’re faced with people making choices and they’re not really sure which trend to blame.”…..

New York Times: Read the full article

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