Breakfast Cereal Industry Makes Dramatic Turnaround During COVID-19 Pandemic
NORTH TEXAS (CBSDFW.COM/CNN) - Apparently, it's not just for breakfast anymore, and during the coronavirus pandemic something astonishing happened on cereal aisles across the country: They cleared out.
Beloved brands like Grape-Nuts were suddenly out of stock. Companies once desperate to boost sales swiftly curbed their promotions on products, fearing that they couldn't meet demand.
The early days of the pandemic led to shortages in packaged goods as people rushed to stock up. But the surge in cereal sales marked a dramatic turnaround: In 2019, cereal sales dropped 0.6%, following a 1.4% drop in 2018, according to Nielsen data. In 2020, sales jumped nearly 9%.
Before the pandemic, the products were passed over by many consumers who were looking for fresh ingredients or ate breakfast on the go. But restrictions designed to curb the spread of COVID-19 led more people to eat breakfast at home, and stock up on familiar, shelf-stable products. Suddenly, cereal was cool again.
Demand rose on two ends of the cereal spectrum: Indulgent, nostalgia-invoking treats, which had started to gain traction before the pandemic, got even more popular. And healthier products geared toward adults got an unexpected revival.
"Up until the pandemic hit, the kids brands had been still doing relatively well," said Tom "TD" Dixon, chief growth officer for Post Consumer Brands. "The more adult-focused brands were kind of just hanging on by a thread. And the fact that they dramatically jumped during the pandemic, that was a little bit surprising. We weren't expecting that," he said.
Sugar Surge
At Post, "the Pebbles brand has been on fire," said Dixon. Demand for Fruity Pebbles and Cocoa Pebbles during the pandemic inspired Post to partner with nutritional supplement maker Dymatize on Pebbles-flavored protein powders. "Tastes like Saturday morning," the Dymatize website promises. Demand also grew for Honeycomb and Honey Bunches of Oats, particularly the almond and honey roasted varieties, Dixon noted.
How to sustain that growth is "the million dollar question," said Dixon. One way to capitalize on the new taste for cereal is to repackage the products as snacks that can be eaten on the go. Earlier this year, Post launched Pebbles Crisps and Honeycomb Big Bites, designed to be eaten straight out of the bag.
At General Mills, Cinnamon Toast Crunch, Lucky Charms and Reese's Puffs saw elevated sales during the pandemic, according to Ricardo Fernandez, the company's president of US cereal.
Those brands have been helped by nostalgia, Fernandez said. A customer might feel, "I grew up eating it as a kid, I'm in this new moment of a pandemic and I need things that make me feel comfort," he said.
In September, General Mills restored the '80s versions of Cocoa Puffs, Golden Grahams, Cookie Crisp and Trix, reviving original shapes and recipes. "We just had a bunch of households that have re-tried these things and rediscovered these things, and we're seeing that being a big benefit," Fernandez said.
General Mills also saw growth in Cheerios, which had been doing well before the pandemic and has gained traction with its heart health messaging.
Grains And Nuts
And then there were the healthier offerings.
At General Mills, Nature Valley granola and Basic 4, multigrain flakes with almonds, raisins and yogurt-covered dried cranberries, "were doing fine," before the pandemic, said Fernandez, who described those brands as a "stable part of the category." But, he said, adults staying home over this past year accelerated demand for those items.
Over at Post, Great Grains, made with flakes and granola clusters, saw a surge, particularly the raisins, dates & pecan flavor and the cranberry almond crunch variety, Dixon said, noting that millennials were trying the products, maybe for the first time.
"They were the least represented cohort ... prior to this," he said. "We attribute a lot of the growth of those healthier brands to the fact that you've got a new group of consumers participating for the first time."
Cereal brands hope that once consumers have tried the brands, they'll keep coming back, even after the pandemic.
Another hit? Grape-Nuts, also made by Post. "It's very satiating," Dixon said, noting that the cereal has resonated among people seeking wholesome, natural products.
Post had to temporarily suspend production in one building late last year because of COVID-related absenteeism, leading to a Grape-Nuts shortage, CEO Robert Vitale said during a February analyst call.
Grape Nuts lovers can breathe easy that the cereal is coming back, Dixon noted. "We expect to be back in full production over the next couple of weeks."
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