For years now, the cereal industry has been declining and many of the nation’s leading food marketers have been experiencing significant declines in their packaged cereal businesses.
True, fresh, natural, organic, etc. is in and processed is out. But in many cases the principal reason is perceived health and nutrition not price, convenience or the many other factors that made breakfast cereal one of the most popular categories in the food industry.
Let’s not forget that packaged cereal was created in the late 1800s as a health food, and its nutritional value is still recognized today by institutions like the Harvard School of Public Health.
What the industry is missing is not quality product(s), but competitive marketing. Packaged cereal is not only losing share to fresh yogurt, which it is, but even more to restaurants.
The breakfast wars are on, and they’re being fought most effectively by quick-serve restaurants and not packaged food cereal.
When McDonald’s, Dunkin Donuts, Starbucks, and others fight for share of AM stomach, they are growing breakfast sales out of home at the expense of breakfast cereal, among others.
Remember the cola wars? Pepsi was the big winner because David took on Goliath and grew its share of market. However, Coke was also a winner because it defended aggressively and grew the category enough for its sales to increase as well. The big loser was Royal Crown, that once was a legitimate #3 but refused to fight and got trampled by the elephants.
Packaged cereal has a whale of a value proposition relative to restaurant breakfast (with some limitations of course), but no one is telling that story, and the results are predictable.
When DiGiorno repositioned itself against home-delivered restaurant pizza, the brand experienced a rapid surge in popularity. Similarly, Special K (yes, the cereal) found success as a meal replacement for weight loss. Other brands have seen similar transformations.
Today the CPG industry has convinced itself that breakfast cereal is off-trend, frozen foods are in a deep freeze, consumers don’t care about their weight, and much more. Those who believe these conclusions are destined to contribute to the demise of these three and many other critically important packaged food businesses.
It’s time to rethink the marketing of quality consumer packaged foods.
Insights
Reimagining Packaged Cereal
Consumer Goods | Insights
