Cereal's Big Comeback

The Lempert Report
March 13, 2015

After years of a steady decline, cereal is on the rise.

Is cereal making a come back? According to a new report from IBISWorld Research,  the answer is yes. The market research firm says that the cereal industry’s revenue will climb 0.9% annually through 2020, when it will reach $11.6 billion, $600 million more than revenues predicted for 2015. This figure is a big reversal of the 1% annual decrease that has been cereals' story for the last five years.

According to the report, a key reason behind this is a predicted 2.5% increase in consumers’ per capita disposable income annually for the next five years. And this predicted ability and willingness to pay more for higher quality cereals combined with consumers increased interest in healthier foods, such as those made with whole grains, may also prompt manufacturers to develop products with more fiber, protein and vitamins or gluten free.  For example, the report notes that, "..major player General Mills introduced Multi Grain Cheerios, while Kellogg's enhanced it's Froot Loops and Apple Jacks lines with fiber." 

The report also predicts that consumer interest in healthy cereals will mean we see smaller niche cereal companies make a bigger entrance. 

We recently reported on Technomic’s “The Breakfast Consumer Trend Report,”  which found that while 63% of consumers believe it’s unhealthy to skip breakfast, but only 26% actually eat breakfast every day.  Many skip breakfast due to lack of time and most go for convenience over nutrition. 

As cereal brands work to win over the health conscious shopper,  such research on breakfast trends mean that supermarkets would benefit from highlighting the breakfast aisle.  With a strong consumer interest in healthier, higher end cereals and knowing that many consumers skip breakfast due to lack of time and a need for convenience. Retailers can help by showing their shoppers how to have, and where to find a quick and healthy breakfast. Highlight nutritious options, like healthy cereals and show shoppers that a good breakfast is not that hard to find.