Fri, Apr-06-18, 07:19
To Good Health!
Plan: IF Fung/LC Westman/Primal
Unicorns and Lucky Charms are Magical.
...is the closing line of a Wall Street Journal article this morning.
The actual on-line Title is "A Spoonful of Sugar Helps the Sales Go Up: Cereal Makers Return to the Sweet Stuff"
Out: protein and fewer carbs. In: unicorn-shaped marshmallows. It’s a ‘permissible indulgence’
The print title is "Cereal Makers return to a Sugary Past" with a photo of cereal dispensers and menu board from the Kelloggs NYC Cafe [If the unicorn cereal is not sugary enough, you can have a Pop-Tart Ice Cream Sandwich ($6) for dessert]
The gist of this article is that cereal makers tried to give Americans healthier cereal, but gosh darn, we won't just buy it. Americans want junk and sugar so the cereal companies are making it for them again.
By Annie Gasparro
April 5, 2018 10:04 a.m. ET
To get consumers to eat cereal, big food companies are doubling down on sugary goodness.
Lucky Charms Frosted Flakes from General Mills Inc. GIS 0.13% and Chocolate Frosted Flakes from Kellogg Co. K -0.57% are among the industry’s latest answers to the persistent decline in cereal sales.
For years, the big brands tried to go healthy as the main strategy to win back consumers who had defected to Greek-style yogurt, protein bars and other breakfast items with more protein and fewer carbohydrates than cereal. General Mills in 2014 came out with a higher-protein version of Cheerios and removed any genetically modified ingredients from original Cheerios. In 2013, Post Holdings Inc. POST -0.08% introduced Honey Bunches of Oats Morning Energy, which highlighted higher protein and fiber content. And in 2011, Kellogg started selling a variety of Frosted Flakes with 25% less sugar and three times the fiber.
Sales of children’s cereal fare better than adult brands that are marketed as healthier. [This graph shows all cereal sales are down, avg. 5.6% 2014-17, but Shredded Wheat down 33% while fruity marshmallow cereals only down 3.6%]
That didn’t work. Overall cereal sales in the U.S. have declined 11% over the past five years to around $9 billion in 2017, according to Mintel, a consumer research firm. Post CEO Robert Vitale said cereal has lost a tenth of its shelf space as a result.
Now, many food manufacturers are going back to basics. Consumers of cereal—children and adults alike—care less about nutrition and more about fun flavors, range of colors, and sweet taste, according to market research firms and food company executives. And many aren’t necessarily eating it for breakfast, and instead are treating it as a snack or even dessert, they said.
“Taste is king,” said Dana McNabb, General Mills’ president of cereal. Ms. McNabb, who oversaw the company’s latest creations—Chocolate Peanut Butter Cheerios, Lucky Charms Frosted Flakes and Cinnamon Toast Crunch shredded wheat—said those new products are selling better than the company’s healthier twists on their so-called fun brands. “What we realized is that trying to do the same thing across all of our cereals doesn’t work.”
General Mills revived its discontinued artificially colored-and-flavored Trix cereal last year after consumers complained about the dull look and different taste of the all-natural ingredients the company had used as substitutes. “Trix is the best example of what happens when you do something the consumer doesn’t like: They let us know,” Ms. McNabb said.
Sales of children’s cereal, which includes many indulgent varieties with cartoon mascots, fell about 1% last year. Adult cereal sales sank 7%, according to market research firm Nielsen.
Big food makers say they are under no illusion that sales of cereal—and other processed foods—will return to the growth rates of 1980s. Consumers are moving toward options they think are fresher and less processed, a trend that seems unlikely to change anytime soon. Kellogg, General Mills and Post are diversifying their businesses by buying smaller brands that make other foods, to protect them from cereal sales determining their fate.
The cereal business, however, is still important, making up a significant portion of their sales. The companies also stressed that they aren’t abandoning healthier cereals like Special K or Grape-Nuts.
“Cereal is big, and it is profitable. We recognize that we have to stabilize it,” said Kellogg’s new chief executive, Steve Cahillane. “Frankly, we haven’t done enough to keep the consumer engaged.”
Emphasizing taste and getting Americans to eat cereal at times other than breakfast are the industry’s best shot at recovering from what has been an abysmal decade, said John Owen, a senior food analyst at Mintel.
“Cereal is processed. It’s carbs. It’s not so healthy for breakfast, but it’s a permissible indulgence that seems not as bad as eating a traditional dessert,” he said.
Mintel’s research shows that 43% of adults eat cereal as a snack at home, and 30% of cereal consumers say they choose cereal that tastes good regardless of how nutritious it is.
Dan Goubert, a college student from Grand Rapids, Mich., said he eats cereal late at night while playing videogames. “I’m not trying to be healthy. It’s a midnight snack kind of thing for me now. It doesn’t fill you up in the morning,” he said.
Marissa Kopp, who lives in Naperville, Ill., with her husband and their two young sons, said that although she is careful to feed her children unsweetened oatmeal and whole-wheat pasta with added fiber, she occasionally has cereal for dinner. “I am so much more into reading food labels for my kids than my husband and I. Sometimes I’ll just have Golden Grahams,” she said.
General Mills, the maker of Golden Grahams, in March reported that retail sales of its cereal rose 2% in the latest quarter, thanks to Peanut Butter Chocolate Cheerios and Lucky Charms Frosted Flakes.
Post recently brought back Oreo Os cereal, its offering made to taste like the popular Nabisco cookies that it had discontinued in 2007. And it stopped selling its newer Morning Energy variety of Honey Bunches of Oats. Kellogg discontinued its lower-sugar Frosted Flakes and came out with chocolate and cinnamon varieties.
After working for years to remove the synthetic dyes in Lucky Charms’ marshmallows, General Mills has abandoned that goal and instead recently came out with a new unicorn-shaped marshmallow to boost sales. The unicorn has gotten a lot more attention from consumers than Ancient Grain Cheerios ever did, Ms. McNabb said. “Unicorns are popular. But unicorns and Lucky Charms are magical.”