Inflation raises the price of almost everything, and cereal is one of the things that has seen a big price jump in the last decade. According to the U.S. Bureau of Labor Statistics, prices for cereals and cereal products were 35.75% higher this year versus 1995. This is a $7.15 difference in value.
While prices have gone up, sales have gone down. The industry hasn’t been helped by the fact that fast food companies are luring in customers with their egg and bacon breakfast promotions. With years of declining sales, it was last year that the U.S cereal market saw its sales flat according to General Mills CEO Jeff Harmening.
General Mills, the company behind Cheerios, Trix, and Cocoa Puffs, has recently unveiled its plans to revive cereal sales which includes selling a box at a staggering $13.The cereal is called Morning Summit and was launched late last year. It has almonds as its first ingredient and is the company’s attempt to attract health conscious consumers who may be skipping cereal for breakfast now. The 38.5 oz box also has cereal flakes made with whole grains (providing 1/3 of daily recommended amount), dried cherries, dried cranberries, and pumpkin seeds.
“Our strategy to drive continued cereals growth is centered on launching compelling innovation that offers taste, convenience and health benefits, while investing in brand building,” said CEO Jeff Harmening at the annual Consumer Analyst Group of New York (CAGNY) investor conference. “That engages consumers and gives them another reason to walk down the aisle.”
“We believe this category improvement has been driven by a combination of our stronger performance and some improving macro and demographic trends, including a stabilization in the balance of breakfast at home versus away from home, as well as a return to growth and the number of households of kids in the U.S.,” Harmening has said.
During the company’s second quarter earnings report, Harmening said, “‘m very pleased by our performance in US Cereal driven by strong execution against the fundamentals. We grew our US Cereal retail sales modestly in fiscal ’18 and in fiscal ’19 and our results accelerated to 2% growth in the first half of fiscal ’20.”
He added, “We’ve expanded our share leadership position through investment behind compelling consumer ideas such as our Cheerios heart health campaign, which drove 4% retail sales growth on the Cheerios franchise in the first half of the year. We benefited from consumer support behind Cinnamon Toast Crunch and our partnership with Travis Scott on Reese’s peanut butter pops. And innovation continued to add to our growth with strong first half performance on Blueberry Cheerios and Cinnamon Toast Crunch Cheerios.”