Chocolate, cinnamon, and unicorns: Inside the last-ditch effort to save sugary cereals

Kellogg is digging into its bag of tricks to get Americans excited about cereal again.For the first time in 10...

Posted: May 24, 2018 2:19 AM
Updated: May 24, 2018 2:19 AM

Kellogg is digging into its bag of tricks to get Americans excited about cereal again.

For the first time in 10 years, Kellogg is launching a new Froot Loops flavor - Wild Berry. A purple star will join the cereal's blend of bright red, blue and green rings for a "berry-inspired mix."

The update to Froot Loops is Kellogg's latest effort to revive consumers' shrinking appetites for sugary cereals.

But instead of running away from sugar, Kellogg is leaning into its classic brands. In 2016, it launched cinnamon Frosted Flakes and a chocolate version hit the market in November. The company also debuted a limited-edition cereal with unicorns earlier this year.

Instead, Kellogg is trying to rebrand cereal as an anytime-of-day meal that fits in the morning, as an afternoon snack or an evening desert - "Whatever Froots Your Loops" is the new tag line for the Froot Loops brand. It is selling bagged cereals to make them more snackable.

"The companies are likely diversifying their marketing strategies to try to capture new occasions," AllianceBernstein analyst Alexia Howard said. "Everybody is trying to reposition themselves into the snacking space."

By putting a new spin on fading childhood breakfast staples, Kellogg is playing on customers' nostalgia. It hopes people who haven't thought about Toucan Sam in years may come back to try the brand again.

Kellogg isn't the only company trying this strategy.

General Mills rolled out Chocolate Peanut Butter Cheerios in 2017 and unicorn-shaped marshmallow Lucky Charms earlier this year. It also brought back artificial coloring and flavors in Trix last year after an outcry from customers. Post added cinnamon to its classic Fruity Pebbles brand.

Related: Does anybody eat cereal for breakfast anymore?

Sugary slump

Cereal sales in the United States have dipped 9% over the past five years to $10.5 billion. They will drop an additional 5% during the next five years, market research firm Euromonitor predicted.

In the past, brands pitched cereals as a healthy way to start the day and provide energy for kids, but the marketing started to fall flat as healthier options emerged.

More Americans are swapping out a bowl of cereal in the morning for protein and fruit bars, and on-the-go yogurts that offer more convenience and less sugar, according to Euromonitor research Ana Sepulveda.

"Sugar remains one of the biggest concerns for consumers in breakfast cereal, and future regulatory changes will only magnify this importance," she said.

A new FDA nutrition labeling rule will go into effect by 2020 that more clearly labels how much added sugar and calories are in their food.

Changing consumer preferences have hurt General, Kellogg and Post, the largest cereal producers in the United States. General Mills' overall sales have dropped for three straight years and Kellogg's have declined four years in a row.

Millennials have been at the front of the shift to healthier and more portable snacks, and companies have expanded their lineups in recent years to spark growth.

General Mills bought Annie's organic pastas and snacks for $820 million in 2014 and Blue Buffalo pet food for $8 billion earlier this year. Kellogg dished out $600 million for RXBar, and Post paid $1.5 billion for breakfast sausage maker Bob Evans Farms last year.

But cereal remains core to their businesses. Kellogg's morning foods division, which also include Corn Flakes, Rice Krispies, Apple Jacks and Pop-Tarts, made up 21% of the company's $12.9 billion in sales last year.

Any turnaround strategy to boost sales involves squeezing out every dollar from cereal.

Morning foods are no longer Kellogg's "growth engine," chief executive Steve Cahillane said in February. He's searching for ways ways to "stabilize" the business.

Kellogg, General Mills and Post are attempting a mix of cheaper prices, advertising nods to nostalgia, and eye-popping colors and shapes to convince consumers to give cereal another chance.

These companies are not emphasizing health benefits as much as they used to in their advertising.

Related: Trouble in Big Food

Cereal price wars

The strategy is working for General Mills.

CEO Jeff Harmening attributed a 2% rise in US cereal sales last quarter to Chocolate Peanut Butter Cheerios and unicorns in Lucky Charms.

"There's no shortage of examples of good news and messaging on our cereal business this year," he said in March.

Kellogg cereals have also improved. "Frosted Flakes and Fruit Loops play very well," Cahillane told analysts earlier this month. He pointed to Chocolate Frosted Flakes as a strong performer and hinted more innovations were on the way.

Cereal sales in the United States were up 1.5% in the four weeks ending on April 21, according to Howard. But companies have lowered prices to drive those sales, which means they're sacrificing profit.

But the uptick may be unsustainable.

"It's not necessarily going to create value for shareholders if you're spending a fortune on innovation, promotional activities and your pricing and profitability come down," she said.

West Lafayette
Clear
74° wxIcon
Hi: 84° Lo: 58°
Feels Like: 74°
Kokomo
Clear
73° wxIcon
Hi: 81° Lo: 57°
Feels Like: 73°
Rensselaer
Clear
72° wxIcon
Hi: 80° Lo: 56°
Feels Like: 72°
Fowler
Clear
72° wxIcon
Hi: 81° Lo: 58°
Feels Like: 72°
Williamsport
Clear
72° wxIcon
Hi: 83° Lo: 57°
Feels Like: 72°
Crawfordsville
Clear
70° wxIcon
Hi: 82° Lo: 59°
Feels Like: 70°
Frankfort
Scattered Clouds
75° wxIcon
Hi: 82° Lo: 58°
Feels Like: 75°
Delphi
Clear
73° wxIcon
Hi: 82° Lo: 56°
Feels Like: 73°
Monticello
Clear
73° wxIcon
Hi: 81° Lo: 57°
Feels Like: 73°
Logansport
Clear
73° wxIcon
Hi: 81° Lo: 56°
Feels Like: 73°
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 51612

Reported Deaths: 2760
CountyConfirmedDeaths
Marion12074693
Lake5650249
Elkhart361860
Allen2952134
St. Joseph214869
Hamilton1708101
Cass16459
Hendricks1466100
Johnson1345118
Porter84038
Tippecanoe7799
Vanderburgh7686
Clark71144
Madison67864
LaPorte62328
Howard60758
Bartholomew60145
Kosciusko5824
Marshall5579
Noble52028
Boone49144
LaGrange48610
Jackson4783
Delaware47552
Hancock46836
Shelby45925
Floyd41444
Monroe34828
Morgan34531
Grant32226
Dubois3096
Montgomery29820
Henry29618
Clinton2903
White27610
Dearborn26523
Warrick26129
Vigo2588
Decatur25632
Lawrence25225
Harrison21822
Greene19632
Miami1942
Jennings17912
Putnam1738
DeKalb1694
Scott1659
Wayne1586
Daviess15117
Perry14910
Steuben1382
Orange13723
Jasper1362
Ripley1347
Franklin1288
Gibson1242
Wabash1163
Carroll1142
Starke1083
Whitley1076
Fayette1067
Newton10110
Huntington942
Jefferson872
Wells821
Randolph804
Fulton731
Jay720
Knox710
Washington681
Pulaski661
Clay645
Rush623
Posey610
Spencer571
Owen521
Benton510
Sullivan501
Adams491
Brown431
Blackford402
Fountain362
Crawford330
Switzerland320
Tipton321
Parke270
Martin260
Ohio230
Vermillion200
Warren151
Union140
Pike120
Unassigned0193

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events