Cereal Sales Keep Declining, So Some Brands Try Nostalgia

Cereal sales continue to decline as health-conscious consumers start their days with healthier fare, according to a New York Times report, which cited a Euromonitor International stat that shows the category has dropped by nearly $4 billion since 2000.

Here's the chief problem for the sector: While older generations were raised on sugary cereals, today’s millennials (ages 14 to 32) are bypassing cereal in favor of yogurt, bagels, fruit and smoothies. So some companies have responded by targeting older shoppers with nostalgic campaigns about the cereals they loved as children.

Take Kellogg's "Milk and Cereal" TV ad campaign that debuted this summer and includes a jingle that could have been easily born in the late 1970s.

Lucky Charms marketers have taken a similar approach, targeting Gen X and Baby Boomers with the following spot in July.

But the sales figures suggest that the strategy is failing.

Generally, there are many potential reasons for the decline, including higher levels of gluten intolerance and the popularity of high-protein diets. But some analysts chalk it up to environmental and demographic factors, such as lower numbers of children and regional- or ethnic-specific preferences.

For some companies, declining cereal sales equate to higher revenue in other product lines. General Mills has reported higher yogurt sales as its big cereal brands are sagging.

Cereal companies aren’t going down without a fight.

Big G, General Mills’ cereals unit, changed some ingredients and lowered sugar levels with the goal of attracting health-minded consumers. Kellogg’s has seen success by adding protein to Special K and Kashi GoLean. Updated marketing strategies and creative packaging have also garnered results. When General Mills began touting Chex as gluten-free, sales got a boost. Kellogg’s has started offering some of its kid-favorite cereals in pouches, making the morning rush and afternoon snacking easier for busy parents.

“More and more consumers are eating breakfast,” Noel Geoffroy, svp for morning foods marketing at Kellogg's, told the Times. “The absolute market is growing—and along with that, so are the choices of what consumers eat for breakfast.”

Some companies, such as MOM Brands (formerly Malt-O-Meal), haven't seen the effects of the industry-wide decline, the newspaper reported. Now the third-largest cereal maker, MOM has experienced success with eco-friendly packaging, all-natural ingredients, and low-cost, small-sized “price-buster bags.”