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Hot and Cold Cereals - US - August 2014

“Overall, the cereal category faced another years of sales declines mainly as a result of increasing competition from other convenient and nutritious foods. The category’s sweet spot, the hot cereal segment, has increased, albeit minimally, but helps balance the category overall. The question remains, will innovative packaging and marketing, and improved nutritional profiles be enough to turn around category sales?”
- Amanda Topper, Food Analyst
This report answers the following questions:

  • How can the category reverse declining sales?
  • What types of cereals do consumers want?
  • How can packaging innovation address consumer needs?
The $11 billion cereal category declined 5% from 2009-14 despite a high household penetration rate.
 
The cold cereal segment, which represents 87% of category sales, continues to decline as a result of competition from other convenient, nutrient-rich foods, such as yogurt, fruit, and breakfast sandwiches. In contrast, interest in the health benefits of hot cereal, especially oatmeal, have led to a 6% increase in the segment from 2012-14.
 
Packaging and product innovation, including snack-size packs, and protein- and fiber-rich cereals, aim to help turn around declining sales. Additionally, a focus on consumption occasions beyond breakfast, including as a snack or late night indulgence, present areas of opportunity for the category.
 
Mintel here provides a comprehensive analysis of the following factors that have the greatest potential to impact the category’s performance:
  • Reasons for the declining cold cereal segment, including interest in hot cereal, and competition from foodservice options and other breakfast food options 
  • How the market is broadening and how future growth will hinge on growing interest in snacking/on-the-go eating, positive health perceptions of the hot cereal segment, and interest in products with better-for-you attributes (eg fiber, protein, superfoods) 
  • How both hot and cold cereal segments have been performing in recent years, and how they are expected to perform in the near term.
 
Challenges to the market (including interest in health, and expansion of QSR/grab-and-go) and how manufacturers and retailers can position products to confront them Attitudes and behaviors of breakfast cereal consumers, including reasons for consuming more or less cereal, cereal preferences related to nutrition, function, packaging and more.
 
For the purposes of this report, Mintel has used the following definitions:
  • RTE (ready-to-eat) cold cereal is any cereal (eg, corn flakes, shredded wheat, toasted oat cereal) that is usually consumed dry or with dairy/non-dairy milk. 
  • Hot cereal is defined as cereal that must be cooked (on the stovetop or in the microwave oven) before eating, including oatmeal, instant oatmeal, hot wheat, and other grain products. 
  • Cereal bars and other breakfast products, such as Kellogg’s Pop-Tarts, are excluded from the scope of this report, but their importance to overall demand for breakfast cereal is discussed where appropriate.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                • Executive Summary

                  • Overview
                    • The market
                      • Sales forecasted to reach $11.1 billion in 2019
                        • Figure 1: Total US sales and fan chart forecast of hot and cold cereals, at current prices, 2009-19
                      • Cold cereal represents 87% of the category
                        • Figure 2: Total US retail sales of cereals, by segment, at current prices, 2012 and 2014
                      • Market factors
                        • Away-from-home food spending, snacking, population shifts affecting category
                          • Key players
                            • Kellogg, General Mills’ sales decline
                              • Figure 3: MULO sales of cereal at retail, by leading companies, rolling 52 weeks 2014
                            • Retail channels
                              • Supermarket sales represent more than half of the category
                                • Figure 4: Total US retail sales of cereals, by channel, at current prices, 2012-14
                              • The consumer
                                • Some 94% of US adults eat cereal
                                  • Figure 5: Personal consumption of cold and hot cereals, June 2014
                                • Nutritional concerns are main barriers to consumption
                                  • Figure 6: Reasons for eating less hot and/or cold cereals, top five, June 2014
                                • Nearly half of cereal eaters keep more than one type of cereal on hand
                                  • Figure 7: Behaviors related to cold and hot cereals, top five, June 2014
                                • Cereal praised for its versatility
                                  • Figure 8: Agreement with attitudes toward cold and hot cereals, top five, June 2014
                                • What we think
                                • Issues and Insights

                                    • How can the category reverse declining sales?
                                      • Issues
                                        • Insight: Focus on expanding consumption occasions
                                          • What types of cereals do consumers want?
                                            • Issues
                                              • Insight: Health is key, but so is taste
                                                • How can packaging innovation address consumer needs?
                                                  • Issues
                                                    • Insight: Move away from boxes toward smaller, resealable packs
                                                    • Trend Applications

                                                        • Trend: Many Mes
                                                          • Trend: Hungry Planet
                                                            • Trend: Make it Mine
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Sales and forecast of market
                                                                  • Figure 9: Total US retail sales and forecast of hot and cold cereals, at current prices, 2009-19
                                                                  • Figure 10: Total US retail sales and forecast of hot and cold cereals, at inflation-adjusted prices, 2009-19
                                                                • Fairly flat sales in cereal’s future
                                                                  • Figure 11: Total US sales and fan chart forecast of hot and cold cereals, at current prices, 2009-19
                                                                • Forecast methodology
                                                                • Market Drivers

                                                                  • Key points
                                                                    • Competition from other morning foods a category threat
                                                                      • Figure 12: Food away from home as a share of household food expenditures, 1982-2012
                                                                    • Increased snacking leads to greater product innovation
                                                                      • Figure 13: Adults aged 20 years and older consuming specified number of snacks per day, 1977-78 and 2007-08
                                                                    • Hispanic population growth creates opportunity
                                                                      • Figure 14: Total US population by race and Hispanic origin, 2009-19
                                                                  • Competitive Context

                                                                    • Key points
                                                                      • Other breakfast items heat up the competition
                                                                        • Figure 15: Household frozen waffles, pancakes, and French toast consumption, by presence of children in household, January 2013-March 2014
                                                                        • Figure 16: Household frozen breakfast entrees and sandwiches consumption, February 2008-March 2014
                                                                      • Foodservice items offer convenience
                                                                      • Segment Performance

                                                                        • Key points
                                                                          • Cold cereal continues to decline
                                                                            • Sales of cereal, by segment
                                                                              • Figure 17: Total US retail sales of cereals, by segment, at current prices, 2012 and 2014
                                                                            • Cold cereal declines most from 2013-14
                                                                              • Sales and forecast of cold cereal
                                                                                • Figure 18: Total US retail sales and forecast of cold cereals at current prices, 2009-19
                                                                              • Hot cereal continues marginal growth
                                                                                • Sales and forecast of hot cereal
                                                                                  • Figure 19: Total US retail sales and forecast of hot cereals at current prices, 2009-19
                                                                              • Retail Channels

                                                                                • Key points
                                                                                  • Supermarket sales represent more than half of the category
                                                                                    • Sales of hot and cold cereals, by channel
                                                                                      • Figure 20: Total US retail sales of cereals, by channel, at current prices, 2012-14
                                                                                    • Supermarket channel sales of hot and cold cereals
                                                                                      • Figure 21: US supermarket sales of cereals, at current prices, 2009-14
                                                                                    • Other retail channel sales of hot and cold cereals
                                                                                      • Figure 22: US sales of cereals, through other retail channels, at current prices, 2009-14
                                                                                    • Natural supermarkets
                                                                                      • Figure 23: Natural supermarket sales of cereals, by segment, 2011 and 2013*
                                                                                      • Figure 24: Natural supermarket sales of cereals, by gluten-free certification or labeling, 2011 and 2013*
                                                                                  • Leading Companies

                                                                                    • Key points
                                                                                      • Cold cereal continues decline as hot cereal grows
                                                                                        • Figure 25: “Kellogg’s - Milk and Cereal,” Commercial, July 2014
                                                                                        • Figure 26: Hello, Cereal Lovers Website, July 2014
                                                                                      • Manufacturer sales of cereal
                                                                                        • Figure 27: MULO sales of cereal at retail, by leading companies, rolling 52 weeks 2013 and 2014
                                                                                    • Brand Share – Hot Cereal

                                                                                      • Key points
                                                                                        • Quaker’s growth continues, driven by Real Medleys brand
                                                                                          • Figure 28: Quaker’s Nod Off TV Commercial, Commercial, April 2014
                                                                                          • Figure 29: Gluten Free Mighty Tasty Cereal, YouTube Video, October 2013
                                                                                        • Manufacturer sales of hot cereal
                                                                                          • Figure 30: MULO sales of hot cereal at retail, by leading companies, rolling 52 weeks 2013 and 2014
                                                                                        • Key measures remain constant
                                                                                          • Figure 31: Key purchase measures for the top brands of hot cereal, by household penetration, 52 weeks ending Dec. 30, 2012 (year ago), and Dec. 29, 2013 (current)
                                                                                      • Brand Share – Cold Cereal

                                                                                        • Key points
                                                                                          • Falling cold cereal sales inspire wave of varied marketing efforts
                                                                                            • Figure 32: Special K Wonderland, Commercial, July 2014
                                                                                            • Figure 33: Special K Fruit & Yogurt, product description, July 2014
                                                                                            • Figure 34: Smile While You Shake It, commercial, November 2013
                                                                                            • Figure 35: Froot Loops “Couch,” commercial, June 2014
                                                                                            • Figure 36: 2014/Lucky To Be, YouTube Video, June 2014
                                                                                          • Manufacturer sales of cold cereal
                                                                                            • Figure 37: MULO sales of cold cereal at retail, by leading companies, rolling 52 weeks 2013 and 2014
                                                                                          • RTE cereals decline overall across key measures
                                                                                            • Figure 38: Key purchase measures for the top brands of cold cereal, by household penetration, 52 weeks ending Dec. 30, 2012 (year ago), and Dec. 29, 2013 (current)
                                                                                        • Innovations and Innovators

                                                                                          • Near 100% increase in new packaging product launches
                                                                                            • Figure 39: Hot and cold cereal product launches, by type, 2009-14*
                                                                                          • Thinking outside the box
                                                                                            • Fiber, whole grain claims grow
                                                                                                • Figure 40: Hot and cold cereal product launches, by top ten claims, 2009-14*
                                                                                              • Protein-rich cereals help category compete
                                                                                                • Saying goodbye to GMOs
                                                                                                  • Functional claims boost product value
                                                                                                    • Moving beyond breakfast
                                                                                                    • Social Media – Hot and Cold Cereals

                                                                                                        • Key points
                                                                                                          • Market overview
                                                                                                            • Key social media metrics
                                                                                                              • Figure 41: Key social media metrics, July 2014
                                                                                                            • Brand usage and awareness
                                                                                                              • Figure 42: Brand usage and awareness for select cereal brands, May 2014
                                                                                                            • Interactions with cereal brands
                                                                                                              • Figure 43: Interactions with select cereal brands, May 2014
                                                                                                              • Figure 44: Interactions with select cereal brands, May 2014 (continued)
                                                                                                            • Leading online campaigns
                                                                                                              • Image sharing
                                                                                                                • Focus on kids
                                                                                                                  • Rebranding
                                                                                                                    • What we think
                                                                                                                      • Online conversations
                                                                                                                        • Figure 45: Online conversations for select cereal brands, by week, July 14, 2013-July 13, 2014
                                                                                                                      • Where are people talking about cereal brands?
                                                                                                                        • Figure 46: Online conversations for select cereal brands, by page type, July 14, 2013-July 13, 2014
                                                                                                                      • What are people talking about?
                                                                                                                        • Figure 47: Topics of conversation around select cereal brands, July 14, 2013-July 13, 2014
                                                                                                                    • Personal Consumption of Cold and Hot Cereals

                                                                                                                      • Key points
                                                                                                                        • Some 94% of adults eat cereal
                                                                                                                            • Figure 48: Personal consumption of cold and hot cereals – Any consumption, by presence of children in household, June 2014
                                                                                                                            • Figure 49: Frequency of deciding which cold cereal brands are bought, November 2012-December 2013
                                                                                                                            • Figure 50: Frequency of deciding which hot cereal brands are bought, November 2012-December 2013
                                                                                                                          • Nearly one quarter eating more hot cereal this year
                                                                                                                            • Figure 51: Personal consumption of cold and hot cereals – Any more, by gender and age, June 2014
                                                                                                                            • Figure 52: Personal consumption of cold and hot cereals – Any more, by gender and age, June 2014 (continued)
                                                                                                                            • Figure 53: Eating more cereal types repertoire groups, by age, June 2014
                                                                                                                        • Reasons for Eating Less Cold and Hot Cereals

                                                                                                                          • Key points
                                                                                                                            • Nutritional concerns act as main barriers to consumption
                                                                                                                              • Figure 54: Reasons for eating less hot and/or cold cereals, by generations, June 2014
                                                                                                                          • Reasons for Eating Cold and Hot Cereals

                                                                                                                            • Key points
                                                                                                                              • Men value cereal for its protein content, on-the-go convenience
                                                                                                                                • Figure 55: Reasons for eating cold and/or hot cereals, by gender, June 2014
                                                                                                                              • Older generations motivated by convenience, fiber content
                                                                                                                                • Figure 56: Reasons for eating cold and/or hot cereals, by generations, June 2014
                                                                                                                            • Important Nutritional Claims

                                                                                                                              • Key points
                                                                                                                                • Sugar, fiber, protein content most important
                                                                                                                                    • Figure 57: Chex gluten free oatmeal variety pack, July 2014
                                                                                                                                    • Figure 58: Important nutritional claims, by presence of children in household, June 2014
                                                                                                                                  • Younger consumers look for energizing claims, natural ingredients
                                                                                                                                    • Figure 59: Important nutritional claims, by generations, June 2014
                                                                                                                                • Behaviors Related to Cold and Hot Cereals

                                                                                                                                  • Key points
                                                                                                                                    • Nearly half keep multiple types of cereal on hand at once
                                                                                                                                      • Figure 60: Behaviors related to cold and hot cereals, by gender, June 2014
                                                                                                                                    • Older consumers value variety
                                                                                                                                      • Figure 61: Behaviors related to cold and hot cereals, by age, June 2014
                                                                                                                                  • Attitudes Toward Cold and Hot Cereals

                                                                                                                                    • Key points
                                                                                                                                      • Men less brand loyal, more trusting of cereal health benefits
                                                                                                                                        • Figure 62: Agreement with attitudes toward cold and hot cereals, by gender, June 2014
                                                                                                                                      • Youngest consumers need more variety, convenient packaging
                                                                                                                                        • Figure 63: Agreement with attitudes toward cold and hot cereals, by generations, June 2014
                                                                                                                                    • Race and Hispanic Origin

                                                                                                                                      • Key points
                                                                                                                                        • Hispanics significantly more likely to eat cereal
                                                                                                                                          • Figure 64: Personal consumption of cold and hot cereals – Any consumption, by race/Hispanic origin, June 2014
                                                                                                                                        • Hispanics more interested in high-protein, gluten-free cereals
                                                                                                                                          • Figure 65: Important nutritional claims, by race/Hispanic origin, June 2014
                                                                                                                                        • Blacks more likely to value taste, use cereal as a meal replacement
                                                                                                                                          • Figure 66: Behaviors related to cold and hot cereals, by race/Hispanic origin, June 2014
                                                                                                                                        • Hispanics trust health benefits, want more portability
                                                                                                                                          • Figure 67: Agreement with attitudes toward cold and hot cereals, by race/Hispanic origin, June 2014
                                                                                                                                      • Consumer Segmentation

                                                                                                                                            • Figure 68: Hot and cold cereal clusters, June 2014
                                                                                                                                          • Group one: Cereal Connoisseurs
                                                                                                                                            • Demographics
                                                                                                                                              • Characteristics
                                                                                                                                                • Opportunities
                                                                                                                                                  • Group two: Convenience-seeking Consumers
                                                                                                                                                    • Demographics
                                                                                                                                                      • Characteristics
                                                                                                                                                        • Opportunities
                                                                                                                                                          • Group three: Apathetic Eaters
                                                                                                                                                            • Demographics
                                                                                                                                                              • Characteristics
                                                                                                                                                                • Opportunities
                                                                                                                                                                  • Cluster characteristic tables
                                                                                                                                                                    • Figure 69: Target clusters, June 2014
                                                                                                                                                                    • Figure 70: Personal consumption of cold and hot cereals – Any consumption, by target clusters, June 2014
                                                                                                                                                                    • Figure 71: Reasons for eating less hot and/or cold cereals, by target clusters, June 2014
                                                                                                                                                                    • Figure 72: Reasons for eating cold and/or hot cereals, by target clusters, June 2014
                                                                                                                                                                    • Figure 73: Important nutritional claims, by target clusters, June 2014
                                                                                                                                                                    • Figure 74: Behaviors related to cold and hot cereals, by target clusters, June 2014
                                                                                                                                                                    • Figure 75: Agreement with attitudes toward cold and hot cereals, by target clusters, June 2014
                                                                                                                                                                  • Cluster demographic tables
                                                                                                                                                                    • Figure 76: Target clusters by demographics, June 2014
                                                                                                                                                                  • Cluster methodology
                                                                                                                                                                  • Appendix – Other Useful Consumer Tables

                                                                                                                                                                      • Figure 77: Natural supermarket sales of cereals, by organic content, 2011 and 2013*
                                                                                                                                                                      • Figure 78: Hot and cold cereal product launches, by top ten companies, 2009-14*
                                                                                                                                                                      • Figure 79: Hot and cold cereal product launches, by top ten flavors, 2009-14*
                                                                                                                                                                      • Figure 80: Personal consumption of cold and hot cereals – Any consumption, by gender, June 2014
                                                                                                                                                                      • Figure 81: Personal consumption of cold and hot cereals – Any consumption, by generations, June 2014
                                                                                                                                                                  • Appendix – Social Media – Hot and Cold Cereals

                                                                                                                                                                    • Brand usage or awareness
                                                                                                                                                                      • Figure 82: Brand usage or awareness. May-June 2014
                                                                                                                                                                      • Figure 83: Cheerios usage or awareness, by demographics, May-June 2014
                                                                                                                                                                      • Figure 84: Rice Krispies usage or awareness, by demographics, May-June 2014
                                                                                                                                                                      • Figure 85: Lucky Charms usage or awareness, by demographics, May-June 2014
                                                                                                                                                                      • Figure 86: Honey Bunches of Oats usage or awareness, by demographics, May-June 2014
                                                                                                                                                                      • Figure 87: Quaker (oatmeal/hot cereal) usage or awareness, by demographics, May-June 2014
                                                                                                                                                                      • Figure 88: Honeycomb usage or awareness, by demographics, May-June 2014
                                                                                                                                                                    • Activities done
                                                                                                                                                                      • Figure 89: Activities done, May-June 2014
                                                                                                                                                                      • Figure 90: Cheerios – Activities done – I have looked up/talked about this brand online on social media, by demographics, May-June 2014
                                                                                                                                                                      • Figure 91: Cheerios – Activities done – I have contacted/interacted with the brand online on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 92: Cheerios – Activities done – I follow/like the brand on social media because, by demographics, May-June 2014
                                                                                                                                                                      • Figure 93: Cheerios – Activities done – I have researched the brand on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 94: Rice Krispies – Activities done – I have looked up/talked about this brand online on social media, by demographics, May-June 2014
                                                                                                                                                                      • Figure 95: Rice Krispies – Activities done – I have contacted/interacted with the brand online on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 96: Rice Krispies – Activities done – I follow/like the brand on social media because, by demographics, May-June 2014
                                                                                                                                                                      • Figure 97: Rice Krispies – Activities done – I have researched the brand on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 98: Lucky Charms – Activities done – I have looked up/talked about this brand online on social media, by demographics, May-June 2014
                                                                                                                                                                      • Figure 99: Lucky Charms – Activities done – I have contacted/interacted with the brand online on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 100: Lucky Charms – Activities done – I have researched the brand on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 101: Honey Bunches of Oats – Activities done – I have looked up/talked about this brand online on social media, by demographics, May-June 2014
                                                                                                                                                                      • Figure 102: Honey Bunches of Oats – Activities done – I have contacted/interacted with the brand online on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 103: Honey Bunches of Oats – Activities done – I follow/like the brand on social media because, by demographics, May-June 2014
                                                                                                                                                                      • Figure 104: Honey Bunches of Oats – Activities done – I have researched the brand on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 105: Quaker (oatmeal/hot cereal) – Activities done – I have looked up/talked about this brand online on social media, by demographics, May-June 2014
                                                                                                                                                                      • Figure 106: Quaker (oatmeal/hot cereal) – Activities done – I have contacted/interacted with the brand online on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 107: Quaker (oatmeal/hot cereal) – Activities done – I follow/like the brand on social media because, by demographics, May-June 2014
                                                                                                                                                                      • Figure 108: Quaker (oatmeal/hot cereal) – Activities done – I have researched the brand on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 109: Honeycomb – Activities done – I have looked up/talked about this brand online on social media, by demographics, May-June 2014
                                                                                                                                                                      • Figure 110: Honeycomb – Activities done – I have contacted/interacted with the brand online on social media to, by demographics, May-June 2014
                                                                                                                                                                      • Figure 111: Honeycomb – Activities done – I have researched the brand on social media to, by demographics, May-June 2014
                                                                                                                                                                    • Key social media metrics
                                                                                                                                                                      • Figure 112: key social media metrics for select cereal brands, July 2014
                                                                                                                                                                    • Online conversations
                                                                                                                                                                      • Figure 113: Online conversations for select cereal brands, by week, July 14, 2013-July 13, 2014
                                                                                                                                                                      • Figure 114: Online conversations for select cereal brands, by page type, July 14, 2013-July 13, 2014
                                                                                                                                                                      • Figure 115: Topics of conversation around select cereal brands, July 14, 2013-July 13, 2014
                                                                                                                                                                  • Appendix – Information Resources Inc. Builders Panel Data Definitions

                                                                                                                                                                      • Information Resources Inc. Consumer Network Metrics
                                                                                                                                                                      • Appendix – Trade Associations

                                                                                                                                                                        Companies Covered

                                                                                                                                                                        • Family Dollar Stores, Inc
                                                                                                                                                                        • General Mills Inc
                                                                                                                                                                        • Kellogg Company
                                                                                                                                                                        • Pepsi-Cola North America
                                                                                                                                                                        • Quaker
                                                                                                                                                                        • Walmart Stores (USA)

                                                                                                                                                                        Hot and Cold Cereals - US - August 2014

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