Breakfast cereals slow in supermarkets

August 12, 2011

Health claims help some cereal segments, as most Americans continue to skip the morning meal.

Breakfast may be the king of meals nutritionally, but it isn't behaviorally. The latest research shows 54% of U.S. adults want to eat breakfast every day, but only 34% do. While 89% of U.S. moms want their children to start each day with breakfast, 40% say this doesn't happen. And as children grow up, fewer eat breakfast each day: 77% of toddlers and pre-schoolers eat the meal each morning, but just 50% of middle-schoolers and 36% of high-schoolers do so, according to a Kellogg Company consumer study released in June.

In the time crunch vs. breakfast conflict, the meal often loses out. Nevertheless, cereal penetrates 95.0% of U.S. households, led by the 92.1% presence of ready-to-eat cereal, according to Nielsen Homescan Consumer Facts data for the 52 weeks ended December 25, 2010. Hot cereal is the second most widespread at 62.1%, trailed by granola/natural (16.6%), hominy grits (12.9%) and wheat germ (1.7%).

If consumers are substituting Greek yogurt, fresh fruit, power bars and other portable foods for the breakfast meal, F3 can't say for sure. But we suspect that's partly what's behind a total cereal 2.9% dollar sales decline to $6.68 billion in U.S. food stores (posting $2 million and over in annual dollar sales) excluding supercenters in the 52 weeks ended June 11, 2011, according to Nielsen data tracking prepackaged, UPC-coded products only. This occurred on a 2.8% equivalized unit volume (EUV) dip in the same period. A consumer shift to alternate channels - evident in EUV drops in three of the past four years - is likely another factor.

Ready-to-eat cereal commands the category at $5.60 billion, down 3.4% in the latest 12 months on a 3.3% EUV slide. By comparison, dollar sales of hot cereal were down 1.7% to $783.7 million on a 1.1% EUV slip. Dollar sales of granola and natural cereals have swung up in three of the past four years, including a 5.0% rise to $205.5 million on a 5.9% EUV gain in the latest 52 weeks. Hominy grits dipped 1.6% to $79.8 million on a 3.1% EUV fall. Dollar sales of wheat germ slipped the past three years, most recently by 2.7% to $12.5 million on a 5.7% EUV decline, Nielsen reported.

Ten kinds of health claims for cereals are tracked by Nielsen LabelTrends. The three largest segments by claim - all $1 billion or more in annual dollar sales in U.S. food stores excluding supercenters for the same 52-week period - are whole grain, vitamin/mineral presence and fiber presence.  

The whole grain segment eked out a 0.1% dollar sales gain to $2.74 billion. This was led by whole grain ready-to-eat cereals, up 0.7% to $1.87 billion on a 0.6% EUV rise, the data showed.

The vitamin/mineral presence segment topped the $2.0 billion mark on a 0.5% dollar sales rise. Vitamin/mineral ready-to-eat cereals drove this, advancing 1.4% to $1.83 billion on a 1.3% EUV increase.

The fiber presence segment rose 1.9% to $1.10 billion, on the sales strength of fiber ready-to-eat cereals, which were up 1.8% to $985.7 million on a 2.1% EUV gain.