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Breakfast Cereals - US - February 2012

The breakfast cereal market generated an estimated $10.2 billion in total U.S. sales for 2011. While the market is substantial in size, the most pressing concern for marketers is that it has been in decline since 2009. This is due in part to the fact that with a household penetration rate in excess of 90%, it is hard to attract new consumers. This makes it all the more important for manufacturers and retailers alike to retain their core cereal consumer base, of which households with children are a key component.

Given the myriad of breakfast options that consumers can choose from, one challenge that both manufacturers and retailers share is maintaining enthusiasm for a category that faces competition on a variety of fronts. With this in mind, Mintel provides a comprehensive analysis of the following factors that have the greatest potential to impact the category’s performance:

  • What are manufacturers doing in terms of innovation to address consumers’ interest in eating better, while at the same time developing products that are appealing from a taste perspective?
  • How do the major market drivers influence the cereal category, and what role will they play in the future?
  • How have the different cereal segments been performing in recent years, and what are their short-term growth prospects? What, if any, impact has hot cereal’s healthier perception had on the cold cereal segment?
  • How do consumers’ perceptions of the various retail formats influence where they shop for cereal? Which channels have been performing best, and which may need to show some improvement?
  • How effectively have retailers been able to leverage store brands in light of the relatively high price point of name brand cereals that sometimes cost as much as $5 or more?
  • What strategies are manufacturers using to connect with consumers, while addressing advocacy groups’ concerns about marketing to children?
  • What impact do various socio-economic, gender, race/ethnicity, and other demographic factors have on the cereal category?
  • How have consumers adjusted their buying behavior in light of the country’s recession and prolonged economic slump? What lessons can be learned to navigate future economic slumps more effectively and lay the foundation for greater success once the economy recovers?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer data
              • Advertising creative
                • Acronyms and terms
                  • Acronyms
                    • Terms
                    • Executive Summary

                      • Breakfast cereal sales down two consecutive years
                        • Higher sugar, higher sales
                          • Market conditions provide both challenges and opportunities
                            • Competition coming from other foods and other channels
                              • Supermarket channel generates largest share of total U.S. cereal sales
                                • Cold cereal product launches greatly outnumber hot cereal
                                  • Websites and social media complement traditional advertising
                                    • Today’s cereal consumer
                                    • Insights and Opportunities

                                      • Promote non-breakfast cereal consumption to boost usage occasions
                                        • Fitness partnerships further enhance better-for-you (BFY) image
                                          • Drug stores should consider creating health-oriented cereal store brands
                                            • Merchandise organic breakfast cereal with traditional cereals to raise awareness
                                              • Tap into youth’s evolving eating habits
                                              • Inspire Insights

                                                  • Trend 1: Who are the Joneses?
                                                    • Trend 2: Accentuate the Negative
                                                    • Market Size and Forecast

                                                      • Key points
                                                        • Breakfast cereal sales decline eases in 2011
                                                          • Figure 1: Total U.S. retail sales of breakfast cereal, at current prices, 2006-16
                                                          • Figure 2: Total U.S. retail sales of breakfast cereal, at inflation-adjusted prices, 2006-16
                                                        • Fan-chart forecast
                                                          • Figure 3: Fan-chart forecast of breakfast cereal, 2006-16
                                                        • Walmart sales
                                                        • Market Drivers

                                                          • Key points
                                                            • Cereal expected to see biggest price increase in 2012
                                                              • Figure 4: Changes in food price indexes, 2009-12
                                                              • Figure 5: Real disposable income, 2007-11*
                                                            • Children’s population statistics present opportunity and challenge
                                                              • Figure 6: Households, by presence of children, 1999-2009
                                                              • Figure 7: Population, by age, 2006-16
                                                            • Breakfast most important meal of the day
                                                              • MyPlate may represent a growth opportunity
                                                              • Competitive Context

                                                                • Key points
                                                                  • Breakfast occasion attracts a number of food categories
                                                                    • Quick service restaurants have woken up to breakfast opportunity
                                                                      • Convenience and portability important to time-strapped consumers
                                                                      • Segment Performance—Cold and Hot Cereal

                                                                        • Key points
                                                                          • Cold and hot cereal show improvement from 2010
                                                                            • Figure 8: Total U.S. sales and forecast of cold cereal at current prices, 2006-16
                                                                            • Figure 9: Total U.S. sales and forecast of hot cereal at current prices, 2006-16
                                                                          • Cold cereal outsells hot cereal by a wide margin
                                                                            • Figure 10: FDMx sales of breakfast cereal, by segment and subsegment, 2009-11
                                                                            • Figure 11: FDMx sales of cold cereal, by subsegment, 2006-11
                                                                        • Retail Channels

                                                                          • Key points
                                                                            • Breakfast cereal a key category for supermarkets
                                                                              • Figure 12: Total U.S. retail sales of breakfast cereal, by channel, 2009-11
                                                                              • Figure 13: Supermarket/food stores’ sales of breakfast cereal, at current prices, 2006-11
                                                                              • Figure 14: Drug stores, mass, and other retailers’ sales of breakfast cereal, at current prices, 2006-11
                                                                          • Retail Channels—Natural Supermarkets

                                                                            • Key points
                                                                              • Brand loyalty and innovation key to growth in natural supermarkets
                                                                                • Figure 15: Natural supermarket sales of breakfast cereal, at current prices, 2009-11*
                                                                                • Figure 16: Natural supermarket sales of breakfast cereal, at inflation-adjusted prices, 2009-11*
                                                                              • Natural supermarkets sales by segment
                                                                                • Figure 17: Natural supermarket sales of breakfast cereal, by segment, 2009 and 2011*
                                                                              • Leading brands of note
                                                                                • Natural channel sales by organic
                                                                                  • Figure 18: Natural supermarket sales of breakast cereal, by organic, 2009 and 2011*
                                                                                • Natural supermarkets’ gluten-free sales
                                                                                  • Figure 19: Natural supermarket sales of breakfast cereal, by gluten-free, 2009 and 2011*
                                                                                • Consumers express strong interest in organic cereal
                                                                                  • Figure 20: Household usage—organic food, April 2009-June 2011
                                                                              • Leading Companies

                                                                                • Key points
                                                                                  • Kellogg, General Mills remain top manufacturers
                                                                                    • Private label posts biggest sales gain
                                                                                      • Figure 21: Manufacturer FDMx sales of breakfast cereal, 2010 and 2011
                                                                                  • Brand Share—Cold and Hot Cereal

                                                                                    • Key points
                                                                                      • Cold cereal
                                                                                        • BFY brands among the fastest growing
                                                                                          • Figure 22: Selected FDMx brand sales of cold cereal, 2010 and 2011
                                                                                        • Hot cereal
                                                                                          • Quaker Oats’ performance a drain on segment
                                                                                            • Manufacturer and brand sales of hot cereal
                                                                                              • Figure 23: Selected FDMx brand sales of hot cereal, 2010 and 2011
                                                                                          • Brand Share—Cold Cereal (Low Sugar)

                                                                                            • Key points
                                                                                              • General Mills’ emphasis on healthier cereals driving gains
                                                                                                • Figure 24: Selected FDMx brand sales of cold cereal (low sugar), 2010 and 2011
                                                                                            • Brand Share—Cold Cereal (Medium Sugar)

                                                                                              • Key points
                                                                                                • Cold cereal (medium sugar) consumers sweet on Kellogg
                                                                                                  • Figure 25: Selected FDMx brand sales of cold cereal (medium sugar), 2010 and 2011
                                                                                              • Brand Share—Cold Cereal (Medium-high Sugar)

                                                                                                • Key points
                                                                                                  • Manufacturers’ sales down throughout the segment
                                                                                                    • Figure 26: Selected FDMx brand sales of cold cereal (medium-high sugar), 2010 and 2011
                                                                                                • Brand Share—Cold Cereal (High Sugar)

                                                                                                  • Key points
                                                                                                    • Segment grows despite consumers’ interest in eating better
                                                                                                      • Figure 27: Selected FDMx brand sales of cold cereal (high sugar), 2010 and 2011
                                                                                                  • Innovations and Innovators

                                                                                                    • Key points
                                                                                                      • Cereal product launches rebound following sharp decline in 2009
                                                                                                        • Figure 28: Breakfast cereal product launches, by subcategory, 2007-11
                                                                                                        • Figure 29: Breakfast cereal product launches, by top 10 claims, 2007-11
                                                                                                        • Figure 30: Breakfast cereal product launches, by top 10 companies, 2007-11
                                                                                                        • Figure 31: Breakfast cereal product launches, by private label share, 2007-11
                                                                                                      • Private label
                                                                                                        • BFY
                                                                                                          • Unique promotions
                                                                                                          • Marketing Strategies

                                                                                                            • Key points
                                                                                                              • Cereal manufacturers’ CFBAI membership gives industry a powerful voice
                                                                                                                • General Mills hopes movie promotion is a blockbuster
                                                                                                                  • General Mills’ retro cereal boxes connect with parents and their children
                                                                                                                    • Manufacturers’ websites used to promote breakfast/cereal benefits
                                                                                                                      • Facebook is tool for promoting cereal at corporate and brand level
                                                                                                                        • Television advertising
                                                                                                                          • General Mills’ Cheerios
                                                                                                                            • Figure 32: General Mills/Cheerios, July 2011
                                                                                                                          • General Mills’ Chex Cereals
                                                                                                                            • Figure 33: General Mills/Chex, January 2011
                                                                                                                          • Kashi Cereals
                                                                                                                            • Figure 34: Kashi/Cereal, January 2011
                                                                                                                          • Kellogg’s Frosted Mini-Wheats
                                                                                                                            • Figure 35: Kellogg’s/Frosted Mini-Wheats, February 2011
                                                                                                                          • Kellogg’s Corn Flakes
                                                                                                                            • Figure 36: Kellogg’s/Corn Flakes, March 2011
                                                                                                                        • Breakfast Consumption Frequency

                                                                                                                          • Key points
                                                                                                                            • Oldest consumers make time for breakfast
                                                                                                                              • Figure 37: Breakfast consumption, by age, November 2011
                                                                                                                              • Figure 38: Breakfast consumption, by household income, November 2011
                                                                                                                              • Figure 39: Breakfast consumption, by presence of children in household, November 2011
                                                                                                                          • Breakfast Food Consumption by Type and Frequency

                                                                                                                            • Key points
                                                                                                                              • Cold cereal most popular breakfast type
                                                                                                                                • Figure 40: Types of breakfast food eaten, by gender, November 2011
                                                                                                                                • Figure 41: Types of breakfast food eaten, by age, November 2011
                                                                                                                                • Figure 42: Types of breakfast food eaten, by household income, November 2011
                                                                                                                              • Fresh fruit has highest consumption frequency
                                                                                                                                • Figure 43: Breakfast food consumption frequency, November 2011
                                                                                                                                • Figure 44: Breakfast cereal consumption frequency, by age, November 2011
                                                                                                                              • Textured and single-type cereals favored over granola and muesli
                                                                                                                                • Figure 45: Types of cold cereal eaten, by frequency by age, November 2011
                                                                                                                              • Traditional oats and flavored instant oatmeal most frequently used
                                                                                                                                • Figure 46: Types of hot cereal eaten, by frequency, by age, November 2011
                                                                                                                            • Household Usage

                                                                                                                              • Key points
                                                                                                                                • Cold cereal gets warm welcome in U.S. households
                                                                                                                                  • Figure 47: Household usage—breakfast cereal (cold), by age, April 2010-June 2011
                                                                                                                                  • Figure 48: Household usage—breakfast cereal (cold), by presence of children, April 2010-June 2011
                                                                                                                                • Consumers a bit cool to hot cereal
                                                                                                                                  • Figure 49: Household usage—breakfast cereal (hot), by age, April 2010-June 2011
                                                                                                                                  • Figure 50: Household usage—breakfast cereal (hot), by presence of children, April 2010-June 2011
                                                                                                                                • Kids aged 6-11
                                                                                                                                  • Cold cereal
                                                                                                                                    • Figure 51: Kids’ usage—cold cereal, by kids aged 6-11, April 2010-June 2011
                                                                                                                                  • Hot cereal
                                                                                                                                    • Figure 52: Kids’ usage—hot cereal, by kids aged 6-11, April 2010-June 2011
                                                                                                                                  • Teens aged 12-17
                                                                                                                                    • Cold cereal
                                                                                                                                      • Figure 53: Teens’ usage—cold cereal, by teens aged 12-17, April 2010-June 2011
                                                                                                                                    • Hot cereal
                                                                                                                                      • Figure 54: Teens’ usage—hot cereal, by teens aged 12-17, April 2010-June 2011
                                                                                                                                  • Attributes That Matter

                                                                                                                                    • Key points
                                                                                                                                      • Fiber and whole grains key attributes to cereal users
                                                                                                                                        • Figure 55: Attributes that matter, by gender, November 2011
                                                                                                                                        • Figure 56: Attributes that matter, by age, November 2011
                                                                                                                                        • Figure 57: Attributes that matter, by presence of children in household, November 2011
                                                                                                                                    • Reasons Why and Ways People Eat Cereal

                                                                                                                                      • Key points
                                                                                                                                        • Some distinct reasons behind men’s and women’s cereal usage
                                                                                                                                          • Figure 58: Reasons for cereal consumption, by gender, November 2011
                                                                                                                                          • Figure 59: Reasons for cereal consumption, by age, November 2011
                                                                                                                                          • Figure 60: Reasons for cereal consumption, by household income, November 2011
                                                                                                                                          • Figure 61: Reasons for cereal consumption, by presence of children younger than 18 in household, November 2011
                                                                                                                                        • Milk a natural complement to cereal
                                                                                                                                          • Figure 62: Ways consumers eat cereal, by age, November 2011
                                                                                                                                        • Cereal considered to be a good value
                                                                                                                                          • Figure 63: Attitudes toward cereal, by gender, November 2011
                                                                                                                                          • Figure 64: Attitudes toward cereal, by age, November 2011
                                                                                                                                          • Figure 65: Attitudes toward cereal, by presence of children in household, November 2011
                                                                                                                                      • Impact of Race and Hispanic Origin

                                                                                                                                        • Key points
                                                                                                                                          • Whites average slightly more weekly breakfast occasions
                                                                                                                                            • Figure 66: Breakfast consumption, by race/Hispanic origin, November 2011
                                                                                                                                            • Figure 67: Types of breakfast food eaten, by race/Hispanic origin, November 2011
                                                                                                                                            • Figure 68: Breakfast cereal consumption frequency, by race/Hispanic origin, November 2011
                                                                                                                                            • Figure 69: Household usage—breakfast cereal (cold), by race/Hispanic origin, April 2010-June 2011
                                                                                                                                            • Figure 70: Household usage—breakfast cereal (hot), by race/Hispanic origin, April 2010-June 2011
                                                                                                                                            • Figure 71: Attributes that matter, by race/Hispanic origin, November 2011
                                                                                                                                            • Figure 72: Reasons for cereal consumption, by race/Hispanic origin, November 2011
                                                                                                                                            • Figure 73: Attitudes toward cereal, by race/Hispanic origin, November 2011
                                                                                                                                        • Cluster Analysis

                                                                                                                                            • Cereal Values
                                                                                                                                              • Demographics
                                                                                                                                                • Characteristics
                                                                                                                                                  • Opportunity
                                                                                                                                                    • Mature Hots
                                                                                                                                                      • Demographics
                                                                                                                                                        • Characteristics
                                                                                                                                                          • Opportunity
                                                                                                                                                            • Same Brands
                                                                                                                                                              • Demographics
                                                                                                                                                                • Characteristics
                                                                                                                                                                  • Opportunity
                                                                                                                                                                    • Young & Healthys
                                                                                                                                                                      • Demographics
                                                                                                                                                                        • Characteristics
                                                                                                                                                                          • Opportunity
                                                                                                                                                                            • Cluster characteristic tables
                                                                                                                                                                              • Figure 74: Breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 75: Breakfast consumption by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 76: Types of breakfast food eaten, by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 77: Breakfast food consumption frequency, by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 78: Breakfast food characteristics, by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 79: Breakfast food consumption frequency, by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 80: Reasons for breakfast food consumption, by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 81: Ways of eating breakfast foods, by breakfast cereal eaters, November 2011
                                                                                                                                                                              • Figure 82: Attributes that matter, by breakfast cereal eaters, November 2011
                                                                                                                                                                            • Cluster demographic tables
                                                                                                                                                                              • Figure 83: Breakfast cereal eaters, by gender, November 2011
                                                                                                                                                                              • Figure 84: Breakfast cereal eaters, by age, November 2011
                                                                                                                                                                              • Figure 85: Breakfast cereal eaters, by household income, November 2011
                                                                                                                                                                              • Figure 86: Breakfast cereal eaters, by race/Hispanic origin, November 2011
                                                                                                                                                                              • Figure 87: Breakfast cereal eaters, by presence of children in household, November 2011
                                                                                                                                                                            • Cluster methodology
                                                                                                                                                                            • Custom Consumer Groups

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Attitudes and behavior of the frequent breakfast consumer
                                                                                                                                                                                  • Lighter male breakfast consumer least likely to eat cereal
                                                                                                                                                                                      • Figure 88: Types of breakfast food eaten, by custom consumer groups, November 2011
                                                                                                                                                                                    • Male breakfast buffs most likely to eat cereal every day
                                                                                                                                                                                      • Figure 89: Breakfast food consumption frequency, by custom consumer groups, November 2011
                                                                                                                                                                                    • Women show greater interest than men in cereal attributes
                                                                                                                                                                                      • Figure 90: Attributes that matter, by custom consumer groups, November 2011
                                                                                                                                                                                    • Cereal favored by all the custom consumer groups for its convenience
                                                                                                                                                                                      • Figure 91: Reasons for cereal consumption, by custom consumer groups, November 2011
                                                                                                                                                                                    • Women more promotion sensitive than men
                                                                                                                                                                                        • Figure 92: Attitudes toward cereal, by custom consumer groups, November 2011
                                                                                                                                                                                    • SymphonyIRI/Builders—Key Household Purchase Measures

                                                                                                                                                                                      • Cold cereal
                                                                                                                                                                                        • Consumer insights on key purchase measures—cold cereal
                                                                                                                                                                                          • Brand map
                                                                                                                                                                                            • Figure 93: Brand map, selected brands of cold cereal buying rate, by household penetration, 2011*
                                                                                                                                                                                          • Brand leader characteristics
                                                                                                                                                                                            • Key purchase measures
                                                                                                                                                                                              • Figure 94: Key purchase measures for the top brands of cold cereal, by household penetration, 2011*
                                                                                                                                                                                            • Hot cereal
                                                                                                                                                                                              • Consumer insights on key purchase measures—hot cereal
                                                                                                                                                                                                • Brand map
                                                                                                                                                                                                  • Figure 95: Brand map, selected brands of hot cereal buying rate, by household penetration, 2011*
                                                                                                                                                                                                • Brand leader characteristics
                                                                                                                                                                                                  • Key purchase measures
                                                                                                                                                                                                    • Figure 96: Key purchase measures for the top brands of hot cereal, by household penetration, 2011*
                                                                                                                                                                                                • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                    • Figure 97: Breakfast consumption, by gender, November 2011
                                                                                                                                                                                                    • Figure 98: Types of breakfast food eaten, by presence of children in household, November 2011
                                                                                                                                                                                                    • Figure 99: Breakfast cereal consumption frequency, by gender, November 2011
                                                                                                                                                                                                    • Figure 100: Breakfast cereal consumption frequency, by household income, November 2011
                                                                                                                                                                                                    • Figure 101: Trended household usage—breakfast cereal (cold), April 2008-June 2011
                                                                                                                                                                                                    • Figure 102: Trended household usage—breakfast cereal (hot), April 2008-June 2011
                                                                                                                                                                                                    • Figure 103: Attributes that matter, by household income, November 2011
                                                                                                                                                                                                    • Figure 104: Attitudes toward cereal, by household income, November 2011
                                                                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                  • American Association of Cereal Chemists (AACC)
                                                                                                                                                                                                  • American Institute of Food Distribution
                                                                                                                                                                                                  • Cereal Partners Worldwide
                                                                                                                                                                                                  • Food and Drug Administration
                                                                                                                                                                                                  • Food Marketing Institute
                                                                                                                                                                                                  • General Mills Inc
                                                                                                                                                                                                  • Grocery Manufacturers of America (GMA)
                                                                                                                                                                                                  • Kellogg Company
                                                                                                                                                                                                  • Malt-O-Meal Company
                                                                                                                                                                                                  • Nestlé USA
                                                                                                                                                                                                  • Organic Trade Association
                                                                                                                                                                                                  • PepsiCo Inc
                                                                                                                                                                                                  • Private Label Manufacturers Association (PLMA)
                                                                                                                                                                                                  • Quaker
                                                                                                                                                                                                  • Ralcorp Holdings Inc.

                                                                                                                                                                                                  Breakfast Cereals - US - February 2012

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