Kellogg's announced that sales are down 4% and cuts its earnings outlook. A UBS Securities analyst suggests that overall cereal is a sluggish performer right now, possibly due to fewer innovations, the effects of the current economic conditions, and even Kellogg's recall this year.
Also announced this week are upcoming price increases from General Mills and Kraft, largely due to higher grain prices. These increases are likely to further impact cereal sales as consumers look to alternatives.
All these developments suggest that we could be in for some dramatic changes in the cereal aisle in the next year. The question is, will the big cereal companies continue to lose ground as consumers shift their allegiances and preferences to more focused brands that offer perceive value?
I'll be watching.
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