Friday, October 22, 2010

Cracks in the cereal bowl

Just a few weeks ago there were some reports, at least from General Mills, that these were good times for cereal. But, new reports this week suggest that the picture is far from bright.

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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Pia said...

I've been looking at Special K ads through the decades and it seems since the 70s they've been the diet cereal. Special K did a great size and self acceptance initiative in the 90s called "Look Good on Your Own Terms" but in 2000 they returned to the old and tired (lose weight by eating this) campaign it is famous for.

tim said...

Not sure the cost of the raw ingredients should affect the final price of any breakfast cereal with the largest cost being marketing advertising and packaging. T