2017 Cereal Year in Review: The Great Quest

As we come to the end of 2017, it is a good time to reflect on the past year, the key stories in the cereal world, and the overall themes we observe. It has been a busy year for those of us captivated by our favorite breakfast food, as cereal companies are trying hard to regain their foothold in an industry that is losing ground among consumers, especially younger generations.

Of course, most noticeable to almost everyone, lots of new cereals were introduced. This year, however, there seemed to be more than ever and the pace of introductions appears to be accelerating. Predictably, there was the typical round of special edition cereals brought out seasonally, such as fall and the holidays. And, numerous line extensions, with new varieties of core brands, like Cheerios. Most interesting, however, was the launch of cereals connected with already strong brands. Post reintroduced Oreo O's after a decade hiatus, and followed up with similar concepts such as Honey Maid S'mores, Chips Ahoy and Nutter Butter. Also, notable for this past were the reintroduction of Classic Trix, and Kellogg's recent partnership with Nintendo to bring us Super Mario.

Behind all the new cereals and marketing initiatives, the real story for 2017 is the quest of cereal companies to turn around the long-standing downward trend in sales, which, as reported by Food Business News, continued with another 2.3% decline compared to the previous year. Post, however, seems to be bucking the trend, eeking out a 0.14% increase. As we come to the end of the year, signs are that things may be turning around, with a late report, last week indicating that General Mills had a 7% U.S. cereal net sales increase, with Lucky Charms, Cocoa Puffs, Cinnamon Toast Crunch and Reese's Puffs showing the biggest increases.

While it is far too early to tell if these glimmers of hope are part of an industry reversal, at minimum, they reveal that the frantic efforts of the big cereal companies may be paying off, if even only for the short term. The significant number of new cereals introduced in 2017 indicates that cereal companies are trying hard, not giving up on yet on this multi-billion dollar food sector. As I have indicated previously, much of what they are trying to do is to throw stuff at the wall to see what sticks. In this way, they hope to find something that will be the breakthrough they so desperately need. Kellogg's recent announcement of a Unicorn cereal coming in the spring of 2018 may be the best metaphor of the ongoing quest for the elusive goal facing the cereal industry.

So, what's ahead for 2018? From what has already been announced, it is evident that the flood of new cereals will continue. These should, at least, keep consumers somewhat engaged, with the ongoing hope that the silver bullet will be found. Innovation remains the key for manufacturers, but eventually someone has to come up with something that will shake up the industry.

If I were to go out on a limb, I would like to believe that this next year will see further advancements in cereal restaurants, and that the big players will use experiential locations to generate new excitement and interest in cereal outside of the traditional retail channels, and in environments that they can better control. Kellogg has already a jump on the others in the U.S., just having opened their permanent location in New York City, but there is so much more room for experimentation and creativity in this space.

Regardless, pull up a bowl of your favorite cereal, and watch with anticipation for what lies ahead.

Happy New Year!

Searching for unicorns

Unicorns have always been an object of fantasy. The mythical creatures are highly desired, but so far impossible to find.

Cereal companies, desperate to return to the good old days of cereal dominance, are in a similar quest for a seemingly equally elusive prize. As we have seen over and over, they keep trying by launching new products. In recent months this has evident in new cereals coming from General Mills and Kellogg. And, just this week Post got attention with the announcement of two new cookie-branded cereals: Chips Ahoy and Nutter Butter.

And, now, fitting to the unicorn metaphor, Kellogg has announced that in the U.S. this spring they will be introducing a limited edition Unicorn cereal, a revised take on a Froot Loop variant they recently released in the U.K. The new cereal is billed as being cupcake flavored, and should definitely attract the attention of children and others fascinated with unicorns.

There's an additional element to this story. While the new Unicorn cereal will not be in stores until March, their announcement ties in with the launch of another big Kellogg happening this week, the opening of their larger, permanent Kellogg's NYC cereal restaurant (a development we reported on this summer)  If you are in New York you can try the new cereal there now.

As we come close to the start of a New Year, it is typical for new cereals to be introduced. Will one of them be the true unicorn that will fulfill the fantasy of cereal executives and fanatics all at the same time? We keep hoping. 

General Mills looking for love

Maybe it's not big news, but in these challenging times for cereal companies, attempts to turn the tide are at minimum interesting. Last week General Mills unveiled a new (or at least updated) logo, the sixth in almost 90 years. Changing the corporate logo by itself is hardly going to really impact cereal sales, but it is a sign of how the company sees itself, and how it wants others to see it.

At first glance, the changes might not be apparent. The big "G," which has been at the core of the company's identity remains. But, added to that is a bright red heart, all accompanied by a new tagline, "Making Food People Love." 

Obviously, the slight modification is a direct, albeit subtle, attempt to tug at consumers' emotions, humanizing a large, global corporation. But, in the end, not much has really changed. I doubt, for example, that most people will even consciously notice the change. Branding and logo expert, Armin Vit, minimized the significance of the change, saying that "a heart, coming from one of the biggest companies in the world, feels so inauthentic. Even if they mean it — and I’m sure they do — it’s like, no, just be a money-making company and leave all of our collective feelings at the door."

I guess the test will be if more love finds it way to General Mills.

Kellogg's sweet dilemma

One of the major problems facing the cereal industry today is the perception that many breakfast cereals contain far too much processed sugar. This has irritated health professionals, concerned parents, and nutrition conscious people in general who are increasingly turning to other morning food options. For years the big companies have been feeling the heat, and in response have modified their recipes to utilize less sugar, salt, and artificial ingredients; and, in turn, increase the use of fiber-rich whole grains.

Yet, despite the efforts of Kellogg, General Mills, and others to reduce sugar, the transition to more healthful cereals is not at all simple. Kellogg discovered this recently when they announced radical changes for cereals that are targeted to children in the United Kingdom. For example, they stated that Coco Pops will see a 40% reduction in sugar, and 20% less in Rice Krispies. Ricicles (called Frosted Rice Krispies in the U.S.) will be discontinued altogether. Frosties (Frosted Flakes in North America) will not be changed, however, will no longer be marketed to children.

On the surface, this all sounds good, but there is much more to the story here. First, it is important to note that Kellogg UK is really late to the game. We have known for quite some time that despite the reformulations that have taken place in the U.S., this was not happening to the same degree in Great Britain. Cereals there have generally contained 30% more sugar than their U.S. counterparts. So, across the pond they have been resisting this change, but obviously realize that they can no longer do so. These latest moves are nutritionally sound, but do demonstrate that companies like Kellogg are not as committed to nutrition as they would like you to believe. Ultimately, instead of doing the right thing, they wait as long as possible until there is enough pressure forcing them to do so.

The reason for this reluctance is the fact that even though many want them to change, there is a large group of consumers who do not want their beloved cereals to be tampered with. In Britain, for example, there has been an outcry from those who do not want Ricicles to leave the market. Companies understand this, as was seen in the recent move by General Mills to go back to their less healthy, artificially-enhanced Trix formula. Even Kellogg UK recognizes this, as it is unwilling to meddle with Frosties, one of their best-sellers. This means making compromises, even as some critics call them out for their hypocrisy, believing that claims to no longer target children are ineffective and hypocritical.

In other words, reducing sugar and otherwise making popular cereal brands healthier is not as easy as it appears. Cereal companies are feeling lots of pressure from all sides, and realize that finding the right balance is difficult in a challenging market.

The real significance of new Super Mario Cereal

The Internet was abuzz within the past couple of weeks with the news that Kellogg was partnering with Nintendo to launch a new, limited edition Super Mario Cereal that will be available by December 11th. This is far more than just another cereal with marshmallows, but one that is associated with a prominent video game adored by many consumers. On these facts alone, it is easily one of the most "fun" new cereals to launch in quite some time.

That all makes sense, so the hoopla is not unexpected. Of course, this isn't the first video game-themed cereal (think Donkey Kong in 1982, Pac-Man in 1983, and a 1988 Nintendo Cereal System brand also featuring Super Mario, along with Zelda). But, what makes this latest Nintendo branded cereal really stand out is the fact that the box can actually become part of the electronic gaming experience.

Built into every box are NFC (near-field communication) tags that be detected by the new Nintendo Switch game controllers, which is similar to how Nintendo's "amiibo" figurines can also be linked up. When the controller and the box are in contact, users receive virtual gold coins or hearts as power-ups during the game. In other words, this cereal is more than just a promotional item - it also functions as an accessory.

Nintendo has been regaining cachet within the video gaming world with their new Switch system, and this tie in with cereal will certainly add to their growing brand capital. But, this should also be a boost to Kellogg as well. Interestingly, however, the Kellogg's logo is not found on the box cover, so being downplayed many consumers might not even realize this comes from the Battle Creek company. Nonetheless, in addition to the sales of cereal, this could be a tremendous learning experience for Kellogg on how to partner effectively with other strong brands.

I have long advocated that there are many opportunities for more co-branding between cereal companies and non-food entities. Obviously, this is not new, but this latest Kellogg-Nintendo partnership suggests that it could be taken to a much higher level. We've seen movies, TV shows and sports heavily linked over the years, but what about clothing, cars, music, travel, causes, etc.?

All this might be just what is needed to get people eating out of their bowls regularly every morning.

(Image: Nintendo)