KANSAS CITY — The holidays bring a steady flow of fresh flavors and seasonal varieties to grocery store shelves, a trend the ready-to-eat cereal category will seek to capitalize on as it works to lift unit sales.
In the 52 weeks ended Oct. 30, dollar sales in the RTE cereal category totaled $9.3 billion, up 7.2% from the same period a year ago, according to IRI, a Chicago-based market research firm. Unit sales, meanwhile, fell 5% in the period. The category’s two largest manufacturers — General Mills, Inc. and Kellogg Co. — account for nearly 60% of sales, but both experienced a dip in unit sales during the period, with unit sales down 3.9% at General Mills and down 14% at Kellogg, according to IRI. And in the case of Kellogg, dollar sales fell 2.1%, which was in sharp contrast to year-over-year growth of 11% at General Mills, 10.6% at Post Holdings, Inc. and 14.1% at Quaker Oats Co., according to IRI.
In the case of Battle Creek, Mich.-based Kellogg, it has been a struggle to recover from a fire and labor strike in late 2021. The company has worked hard to rebuild inventory and recently has begun to recover share across its key brands, primarily through increased on-shelf availability and gradual resumption of commercial activities. The company also has prioritized stock-keeping units.
“The good news is that the category is showing robust growth right now, accelerating to the double digits in quarter three on the strength of increased prices and below-average elasticity,” Steven A. Cahillane, president and chief executive officer of Kellogg, said during a Nov. 3 conference call with analysts to discuss third-quarter results. “The even better news is that our consumption growth has accelerated even faster than the category.”
Mr. Cahillane credited indulgent licensed foods like Cinnabon Bakery Inspired Cereal with helping key the recovery. Discontinued in 2018, Cinnabon Bakery Inspired Cereal returned to store shelves in October thanks to heavy demand from the cereal’s fanbase. Kellogg also debuted a line of portable Kellogg Instabowls, which are cereal bowls containing powdered milk that can be activated with the addition of cold water. The single-serve Instabowls are currently available in four Kellogg cereal flavors: Frosted Flakes, Froot Loops, Apple Jacks and Raisin Bran Crunch.
The holidays also mark the return of The Elf of the Shelf Hot Cocoa Cereal. The limited-edition offering features cocoa-coated star pieces intermingled with white mini marshmallows. Each 1.5-cup serving contains 140 calories and 14 grams of sugar.
“In short, we feel good about where we are in this business,” Mr. Cahillane said. “We’ve restored inventory levels. We’re back on shelf, and we are rapidly recovering share. In addition, we’ve turned back on our commercial programs. And equally importantly, we are making good early progress toward restoring profit margins in this business.”
At General Mills, the Minneapolis-based company is thinking small to go big. The company earlier this month debuted Minis — a new line of cereal that scales down three of the company’s classic cereals to be miniature. Trix, Reese’s Puffs and Cinnamon Toast Crunch are now available in small ball shapes relative to the standard puff cereal size. The Cinnamon Toast Crunch Minis feature the classic cinnamon sugar flavor of the original but in an all new round shape. The Trix and Reese’s Minis feature the classic cereals in smaller shapes.
“Sometimes the best new innovation is the smallest one,” said Mindy Murray, senior marketing communications manager at General Mills. “There’s such a love right now for full-size things that have been shrunk into mini versions, and we realized we could do the same with our cereals. We can’t wait for families to try the cutest new way to experience their favorites one BIG (little) bite at a time.”
General Mills also is offering a slew of new and returning seasonal cereals. Sugar Cookie Toast Crunch and Apple Pie Toast Crunch are returning to shelves as extensions of the Cinnamon Toast Crunch line, while Rudolph the Red-Nosed Reindeer Cereal is making its debut. The hot cocoa-flavored reindeer cereal includes marshmallows in the shapes of Rudolph’s red nose, blue elf hat, and green holiday trees.
Quaker Oats Co., a division of Purchase, NY-based PepsiCo, Inc., has brought back Christmas Crunch, which the company has sold some version of for the past 35 years. The return of the seasonal cereal should continue the momentum Quaker has seen with its Cap’n Crunch brand. In the 52 weeks ended Oct. 30, dollar sales of Cap’n Crunch Crunch Berries surged 22% over the previous year behind 3.9% growth in unit sales, according to IRI.
