05 Apr 2016 US: Can Kellogg save cereal by selling it as a snack food?

Kellogg is using grab-and-go packaging and advertising to reposition cereal as a potential snack for all hours of the day and night rather than a food that’s exclusively for breakfast.

Millenials are great! So, while Tony the Tiger and its other ageless characters have been losing the breakfast battle for years, Kellogg is repositioning some of its brands as a snack for the nation’s largest demographic: people born from the early 1980s to about 2000.

“It’s an alternative to a salty or savoury snack in the evening when you’re looking for a little TV time…. millennials have embraced Froot Loops and Smorz as indulgent snacks,” said Craig Bahner, Kellogg’s US Morning Foods President.

While total US cereal sales have fallen 8.8 percent since 2012, the share eaten in the afternoon and evening has risen steadily in recent years, hitting about 35 percent in 2015, according to the Battle Creek, Michigan-based company.

To ride the trend, Kellogg is repackaging products including Frosted Flakes and Special K in grab-and-go containers and emphasising the nostalgic pull of cereal as a late-night treat.

Breakfast 24/7

The shift to 24/7 breakfast foods has helped other companies, including McDonald’s. Its US revenue and profits have surged since last fall, when it started offering some of its popular morning items, including hash browns and Egg McMuffins, all day.

Saving cereal won’t be easy, however. Sales in the US have declined in each of the last three years, and the slump is projected to continue through at least 2020, according to Euromonitor International.

Kellogg and its main rival, General Mills have argued that negative trends are flattening out, with Kellogg saying growth could resume this year.

But total US sales fell 3.5 percent from a year ago in the four weeks that ended March 23, according to data from Chicago-based market researcher IRI.

The days of steady annual increases probably are gone for good, lost to fundamental shifts in US consumer behaviour, according to Jared Koerten, a Euromonitor senior food analyst.

The collapse has come partly because the longtime breakfast staple has found itself on the wrong side of recent preferences: It’s too sugary, too processed and inconvenient.

A recent report from Mintel found that 56 percent of millennials think cereal should be more portable, while 39 percent said cleaning the dishes after eating is a hassle.

Source: FoodDive.com, Bloomberg

Related reading: