The $10bn US breakfast cereal market has been in a steady state of decline, with consumption down 1% each year for the past decade, according to Rabobank.
But Ian Friendly, executive vice president (EVP) and chief operating officer (COO) of General Mills, said the sector will continue to grow.
“The number of breakfast meals eaten per person is growing, people are skipping less often. Breakfast at home is thriving representing over 80% of all breakfast occasions last year. Cereal remains the most popular at home breakfast by far and demographic trends favor the category,” Friendly said in the company’s Fiscal 2014 investor day yesterday.
Over the next decade children and adults aged 55 and over are projected to drive total US population growth, Friendly said. “And these groups have the highest rate of capita cereal consumption. So we like the growth prospects for our cereal brands in this big on trend category.”
Innovation still needed…
Despite favorable market trends, General Mills will continue to invest heavily in new product development (NPD) and innovative marketing for its cereal portfolio, the EVP said.
The company is expanding its Chex line with a vanilla variant and rolling out its Hershey’s Cookies ‘n’ Creme cereal.
Shawn O’Grady, senior vice president and president of sales and channel development for General Mills, said that knowledge on merchandizing will also help boost business.
“Over the past 52 weeks our cereal brands have been turning on the shelf faster than the category average and faster than the branded competitors. We will be working to drive cereal category velocities and distribution again in 2014,” O’Grady said.
Knowledge on how consumers prefer to shop and navigate the cereal section and how best to set the shelf in terms of brands, flavors and sizes has helped and will continue to help General Mills with cereals.
Quotes used have been taken from the Seeking Alpha transcript from the event.