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Ready-to-eat cereal is a fundamental part of American cuisine. For nearly a century, families have relied on giant boxes of Cheerios and Frosted Flakes to fuel their breakfasts. However, cereal is losing its iconic sound and appeal.
As health-conscious consumers prioritize smoothies, overnight oats, and eggs, cold cereal is being pushed aside. According to a recent survey by CivicScience, only 12% of American households consume cereal on a daily basis.
The peak of cereal consumption was in the mid-1990s. Since then, annual sales in the industry have declined from nearly $14 billion in 2000 to around $10.4 billion in 2019, according to data from Euromonitor. The pandemic briefly boosted demand, but it was short-lived. Volume sales of ready-to-eat cereal in the US dropped 5.4% last year, following an 11% decline in 2021.
The diminished presence of major cereal brands in American households has put companies at a critical juncture.
Kellogg is taking action by separating its slow-growing North American cereal business. The division, which includes brands like Special K and Raisin Bran, will become a new company called WK Kellogg. This move allows Kellogg, which will be renamed Kellanova, to focus on its fast-growing snacks business. Last year, the snacks division, which includes Pringles and Cheez-it, accounted for nearly half of Kellogg’s total sales.
According to Kellogg, this separation will create two stronger and more focused companies. However, it remains unclear how a standalone cereal company can outperform. Revitalizing tired brands requires investment, which contradicts plans to cut costs and increase profit margins. The new company seems destined for mediocrity.
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