Cereal sales have gone soggy as indicated by the sales volumes of companies like General Mills (GIS) and the Kellogg Company (K) in the past two years. Yahoo Finance Reporters Josh Schafer, Alexandra Canal, and Pras Subramanian analyze why American consumers may be choosing not to start the day with a bowl of classic breakfast brands.
JOSH SCHAFER: A great story in the Wall Street Journal today talking about cereal sales. This is ahead of General Mills reporting earnings next week. General Mills is the biggest supplier or seller of cereals in the country. But interesting when you take a look at overall cereal sales. So you saw that they jumped 5.2% in 2020. Apparently, during the pandemic, for some reason, we wanted more cereal. And then you go to 2021, down 8.7%. 2022, down 3.9%.
To me, it's just because cereal is not that good. And we have better options for breakfast. I don't know what you guys make of this coming down. But I don't know how some of these companies, like, the article really gets into, you know, even for General Mills, how do you keep getting people to eat breakfast with you? What sort of different products can you create? And I think anything even cereal adjacent just isn't really breakfast, and people have slowly realized that.
ALEXANDRA CANAL: Yeah. I do think there's a shift--
JOSH SCHAFER: There's a nutritional value problem here that just exists.
ALEXANDRA CANAL: -- a shift to more protein-based breakfast, eggs. I just-- I think the consumers more health conscious than we were in the '80s. Personally, for me, I love breakfast, but I never eat it during the workweek. I love going to brunch on the weekends. But I feel like, when I'm getting up, I'm rushing to get out the door, I don't get hungry right away either. So I'm not going to sit down and have a bowl of cereal.
And for people that are rushing to work, too, and do need breakfast, usually they're having a bar. They're grabbing a shake. The act of sitting down and pouring yourself a milk into the cereal bowl and eating the bowl, that takes a lot of time. And I think the convenience factor is something that consumers appreciate more now.
PRAS SUBRAMANIAN: You know, it's funny, I'm looking at, where are my high protein cereals at? Where is that at? Does it really exist? Unless you kind of order stuff online. The other thing is that kind of what you're talking about right now, Allie and Josh. She was like, we don't eat breakfast. I skip it as a choice.
JOSH SCHAFER: Yeah. I don't either.
PRAS SUBRAMANIAN: Trying to like not really go into the fast part of the breakfast, right? Like, we're not eating it, we're not-- we're skipping it. We're going to something else. The other thing that kind of struck me in that article was about how the secret, the dirty little secret about cereal is, like, it's an adult indulgence. Adults buy it to eat at night.
ALEXANDRA CANAL: So I will say--
PRAS SUBRAMANIAN: But that was funny.
ALEXANDRA CANAL: I used to get like a few years ago, I would get boxes of Special K, and I would eat them--
JOSH SCHAFER: Special K, that was your indulgence?
ALEXANDRA CANAL: Yeah. But they have a lot of sugar.
JOSH SCHAFER: No Captain Crunch? No Cinnamon Toast Crunch?
ALEXANDRA CANAL: I'm trying--
JOSH SCHAFER: Cocoa Puffs?
ALEXANDRA CANAL: I would do the strawberry--
JOSH SCHAFER: Special K Strawberry.
ALEXANDRA CANAL: --which has a lot of sugar, and I would have that--
JOSH SCHAFER: Wild Friday night with Special K strawberry.
PRAS SUBRAMANIAN: I would eat it every now and then.
ALEXANDRA CANAL: But it's not that healthy for you. And I think that's what people are starting to realize. And then you see companies like Kellogg's, which is just spinning off their cereal division, like, all right, you go over here. We'll focus on snacks, which is a lot more profitable. So you know, it'll be interesting to see if the future of the cereal can survive.
JOSH SCHAFER: I think it's probably being more bars, like Pras was saying, right? And even just--
ALEXANDRA CANAL: Remember, there was cereal bars.
JOSH SCHAFER: Special K does make bars that are pretty good.
ALEXANDRA CANAL: They have the milk, like the frozen milk bars.
JOSH SCHAFER: Those were so good. The cinnamon-- they had Cinnamon Toast Crunch ones.
PRAS SUBRAMANIAN: They had frozen milk bars?
ALEXANDRA CANAL: Yeah, it was like-- it was like a bar. And it had Fruit Loops. And then there was--
JOSH SCHAFER: We solved cereals problem in two minutes.
ALEXANDRA CANAL: I mean, we had that.
JOSH SCHAFER: They just need to bring those back. Those were amazing.
PRAS SUBRAMANIAN: Whoa. OK.
JOSH SCHAFER: I'll buy.