Challenges at Kellogg

Recent quarterly financial reports from Kellogg suggest the company continues to face some major challenges. Profits are down 14%, and like a growing number of countries the company is facing a rating review from Moody's Investor Service. The pressure comes as a result of several factors including higher grain prices and a highly competitive marketplace, all this despite trying to cut costs and increase prices.

As I've been saying for awhile now, the big cereal companies are in a difficult position despite their strong brand positions. Consumers are restless and exploring new, authentic options. Can Kellogg's stand out in this environment?

Source: Wall Street Journal - article 1, article 2

Halloween cereal

Halloween and cereal are a perfect fit, and a number of companies have taken advantage of the marketing opportunities over the years, and none more than General Mills. Again, this year, they released their monster cereals in time for Halloween, but they were largely unchanged in box design from 2010. Several other children's-oriented cereals feature similar seasonal graphics again this year.

But, in my opinion, the award for the best Halloween cereal for 2011 goes to Quaker for the introduction of Halloween [Cap'n] Crunch. This is a unique, limited-edition cereal that should provide the most breakfast fun this year.

And the milk turns green!

How healthy are "Natural" cereals?

Recently, a study from The Cornucopia Institute has stirred considerable discussion because of their claim that many so-called "natural" breakfast cereals are merely marketing hype, and deceptive. Compared to organic cereals, they often contain residues of toxic pesticides and genetically modified ingredients; and sometimes are even more expensive.

The "Cereal Crimes" report is certainly worth reading, even just for its exposure of the marketing of cereal brands. There is no doubt that many companies are jumping on the "natural" bandwagon to entice consumers. It should be pointed out, however, that Cornucopia enters the discussion with its own biases, "promoting economic justice for family scale farming". Obviously, for them large food corporations are a threat on a number of levels.

Cereal mascots given reprieve

A long, on-going controversy has been over the use of cartoon characters to market cereal, especially sugared ones targeted to children. The fear for manufacturers has been that the government would step in and regulate this, and ultimately prevent the use of mascots and other enticing images for children.

The industry can sigh a temporary breath of relief, as U.S. government officials recently indicated that they won't tamper with these brand icons at this time. Nevertheless, things could still change down the road, and at minimum there is still the possibility of further restrictions on nutritional composition of foods targeted to children, even if in the form of voluntary guidelines.

In any case, Tony the Tiger, Cap'n Crunch and others are safe, for now at least!

(Source: USA Today)

General Mills and DC Comics

Last week General Mills announced a partnership with DC Comics, and that for a limited time some of their prominent, sweetened cereals would feature custom Justice League comic books. A special website will allow readers to continue their adventure reading. Incorporating books, DVDs, computer games and now comic books, is not a new concept for General Mills. And, this certainly taps into a dedicated niche market of comic fanatics.

A good marketing move.

I am wondering, however, if the execution on this one is enough. This would have been a great opportunity for General Mills to either introduce a new, comic-based cereal, or to feature the comic book heroes more prominently on specially-designed boxes. In my opinion, the simple banner approach lacks vigor, and misses out on an even greater marketing push.

(Thanks to @antonioortegajr for the tip!)

Cereal in Europe

Recently I've been traveling in Europe, which explains the lack of blog posts here.

Of course, regardless of where I go I am always interested to discover what I can about cereal in that location. And, Europe is a great place to observe a different take on cereal. It's been a number of years since I've had the opportunity to visit there, and I was pleasantly surprised with the changes I noticed.

First, the interest in cereal is definitely growing. Certainly, breakfast cereal consumption is nowhere near what it is in North American, but it is no longer an ethnic food for ex-pats. Evidence of this abounds in the grocery stores. Whereas at one time on the continent you would have seen very small shelf space devoted to just a handful of cereal brands, now it is possible to enter any supermarket and see a significant section featuring dozens of varieties. I also noticed that at some of the bed and breakfast places we stayed cereal was available, something I never saw before outside of big hotels catering to international travelers.

It was also evident that that there are some differences between cereal in Europe and the U.S. Even those who do consume it tend to eat smaller serving sizes, and as a complement to their traditional breakfast. For this reason the boxes for sale in the stores are much smaller than what we would typically find in North America. Also, muesli is big in Europe influenced by its popularity in Switzerland, where it is often still consumed during the evening meal.

I also noticed some interesting innovations in Europe. Not only are the big cereal companies tweaking their recipes and producing varieties in tune with the local preferences, but there are packaging innovations as well. In Poland, for example, I couldn't find any actual boxes. All the cereal comes in attractive bags. There are other signs of innovation in Europe as well, as is evidenced by the fact that customized cereal has its roots there with such companies as mymuesli and The Cereal Club.

Having said of all this, I must qualify the above statements by pointing out that the United Kingdom stands out in its relationship with cereal. While I wasn't there on this trip, it is a fact that cereal consumption is much higher in Britain than the rest of Europe, and has many more similarities to its U.S. brand counterparts.

I had a great time in Europe, and enjoyed the cereal sleuthing that went along with it!

Cereal claims

This is hardly news, but nutritional labeling on many foods, and cereal in particular, is often hype more than substance. Now, there is evidence that seems to support the contention that cereal box claims are misleading.

A University of Yale study published in Public Health Nutrition found that most parents misinterpreted the claims made on cereals targeted to children. Except for cereals purported to be organic, parents were more likely to purchase the products because of their understanding of the claims. The study recommended increased regulation of nutrition claims.

I know that we can’t control how people interpret information, even if it is accurate. But, in a highly competitive cereal market it is incumbent on manufacturers to remain on the high road when creating their packaging and marketing. Their reputation depends on it.

Source: BakeryandSnacks.com

Wheaties revisted

It was two years ago today that General Mills launched Wheaties FUEL, a new variety of sports oriented cereal targeted at men and those seeking athletic performance.

I have been watching the progression of this brand since even before its beginning, and I am still not convinced it has been the success General Mills had hoped for or that it could have been. While sales figures for specific products are not released, it is my observation that it hasn't been selling that well. I base my less than scientific analysis on several factors: it doesn't appear to get much grocery store shelf space and few people I talk to are even aware that FUEL exists or is a separate Wheaties cereal. Also, I am not hearing much excitement about its taste characteristics.

General Mills worked hard to launch FUEL using social media, one of the first cereals to be primarily promoted by this means. But, I wonder if they've done enough to build brand awareness through at least some mass marketing campaigns.

Interestingly, just yesterday two new limited edition boxes (Wheaties and Wheaties FUEL) were introduced at the beginning of the NFL season featuring Green Bay Packer stars Aaron Rodgers and Clay Matthews. But, these are limited edition boxes for sale only in Wisconsin. I'm sure they'll sell truckloads there, but by limiting it there they have missed out on significant sales elsewhere among football fanatics.

I hope I am wrong about Wheaties FUEL, but without a finer tuned and broader marketing approach, it may never fully capture the market it was intended to reach.

Kellogg wants monopoly on Toucans?

Kellogg recently entered into a public relations quagmire by taking legal action against the non-profit Maya Archaeology Initiative (MAI) claiming that the MAI's logo infringes on Kellogg's Toucan Sam character from Froot Loops.

Obviously, trademark infringement needs to be taken seriously, but sometimes corporations go to absurd lengths to prove their case, and in the process hurt their own brand image. In my opinion, MAI's toucan is not similar to the the current Froot Loops version and it is highly unlikely that there will be any confusion among the public. As MAI's president, Dr. Francisco Estrada-Bell, said, "This is a bit like the Washington Redskins claiming trademark infringement against the National Congress of American Indians".

Source: MAI

[me ] & Goji to close

Now that I'm unpacked its time to get back to all things cereal. And, there's no better place to start than with breaking news from a company I have followed with interest over the past for years: [me] & Goji
Today the upstart company announced it will he shutting down at the end of the month. Here's an excerpt from a company email today:

When we decided to launch Me & Goji three years ago, our goal was to take a common product—cereal—and completely rethink it. We aimed to offer the best cereal on the market, from our packaging, to the quality of ingredients to the story and values behind it. We believe we succeeded in doing these things and our amazing customers have been the validation.
Ultimately, what led to our decision was our inability to progress out of the bootstrapping startup phase and into a scalable business.  Having tried everything from creating the first cereal of the month club, to a retail product, to a cobranded line of cereals with a teen pop star, we feel comfortable that we have tested all waters.

This is unfortunate news as [me] & Goji has been an impressive entrant into the crowded cereal marketplace. But, as I've pointed out before, it is difficult to compete in this environment, and especially to break into consumers' minds. The future will be won by those who innovate, but the journey there will not be an easy one. Sadly, there will be casualties along the way.