Enter Details

Comment on stories, receive email newsletters & alerts.

This is your permanent identity for Business Insider Australia
Your email must be valid for account activation
Minimum of 8 standard keyboard characters


Email newsletters but will contain a brief summary of our top stories and news alerts.

Forgotten Password

Enter Details

Back to log in

Kellogg's future isn't about cereal anymore

Kellogg's peppermint pattyKellogg’s

The cereal business is on shaky ground — and Kellogg knows it.

Cereal sales dropped 5% from 2009 to 2014, despite the fact that more Americans are eating breakfast than ever before. That’s bad news for Kellogg, the world’s largest cereal company, where cold cereal consumption was down nearly 2% for the year, the company revealed at its Investor Day in November.  

“Cereal used to be the only breakfast option,” Andrew Shripka, Kellogg’s associate director of brand marketing, told Business Insider. “There’s a lot more to choose from than there ever used to be.”

So, Kellogg is taking the “if you can’t beat them, join them” approach to the ever-expanding breakfast market. Instead of convincing customers to return to their daily a bowls of cereal and milk, it is reimagining cereal as an ingredient in other dishes — even those later in the day than breakfast.

This new game plan takes center stage with the ‘Stir It Up’ campaign, launching next week.

Kellogg is partnering with well-known chefs and culinary figures for Stir It Up, with collaborators like Christina Tosi, Master Chef judge, founder of Milk Bar, and creator of Cereal Milk — milk flavored with Cornflakes and brown sugar. These chefs are tasked with inventing new ways to use Kellogg’s breakfast products, starting with creative takes on a bowl of cereal such as Youtube chef Angel Wong’s Macha Morning Bowls and evolving into less breakfast-centric offerings.

Reimagining cereal

Kellogg’s attempts encourage customers to reconceptualize cereal are not limited to the Stir It Up campaign. In a telling introduction, Kellogg CEO John Bryant opened the company’s November Investor Day with a plug for “Kickin’ Crunch” — Special K Protein Flakes mixed with yogurt, avocado, and cayenne pepper.

“We are now seeing in the US over 30% of cereal consumed outside the breakfast occasion; several years ago it was just 20%,” Bryant said later in the Investor Day. “People add different fruits, soy milk, coconut milk, cow’s milk, whatever it might be; a lot of different ways of consuming cereal, and we’re very excited about how this is unlocking future growth for the company, particularly in markets like the US.”

Kellogg 2015 Investor Day slideKelloggSlide from Kellogg’s 2015 Investor Day

The rise of cereal in other dayparts has not only coincided with the fall of cold breakfast cereal, but also Kellogg’s collaboration with the culinary community.

Last June, Kellogg was beginning to come to terms with the fact that cereal was in trouble, with the company’s morning food business declining 5.5% in the first quarter. This was the fourth consecutive quarter of sales decline for breakfast foods. A year and a half later, the company still hasn’t posted positive sales in the category.

It was in this dark time that Kellogg held an event that would inspire its current campaign, with a New York City cereal pop up launched with Tosi for three days in June 2014. The “Recharge Bar” was a success, attracting crowds, media coverage, and customers who pledged to take recipes home.

KelloggA Milk Bar-inspired Recharge Bar combo: Frosted Flakes, Milk Bar cereal milk, dark chocolate chips and marshmallows

In 2015, the company became more entrenched with the foodie community by sponsoring food conference Taste Talks in Brooklyn and Chicago, launching cereal bars where other celebrity chefs created dishes of their own.

According to Shripka, Kellogg’s historically has focused on building its brands, at times to the disadvantage of evolving and advertising the food itself. With Stir It Up, the focus isn’t branding or nutrition — it is on the quality of the product and how good cereal tastes when prepared in different ways. 

 These collaborations also allow some culinary cred to rub off on Kellogg, while helping revitalize brands many associate with the past, whether that be childhood nostalgia (Rice Krispies, Froot Loops) or by-gone health trends (Kashi, Special K).

Shirpka emphasised the authentic nature of the collaborations to Business Insider. The food world’s interest isn’t much of a stretch, as lowbrow nostalgia dominates, from fast food, with Burger King bringing back ’90s classic Surge, to celebrity chefs, with David Chang crafting his own take on Chick-fil-A and Dale Talde creating his own version of McDonald’s chicken nuggets and apple pie.

 If cereal is granted reverence by celebrity chefs, it justifies customers treating it as a modern, notable meal, worthy of creativity, time, and attention — just like the endless slices of avocado toast popping up on Instagram.

“We love the notion of breakfast is the most important meal of the deal, not just as a food point,” says Shirpka.

To convince new and returning customers to buy cereal, the company needs to make them see iconic cereal brands in a new light. Even among people that do still do eat cereal (90% of US households, according to Kellogg’s, buying nearly 21 boxes of cereal per year), convincing them to use cereal in new ways would provide a crucial sales boost.

“You don’t even need a calculator to think about what can happen if we can get that consumer to buy just that one more box of cereal,” Kellogg’s president of US morning foods Craig Bahner said in his Investor Day presentation.

So, the pressure not just on Kellogg to create cereals that fits trends, but also on the company to encourage customers to find new ways to include recognisable cereals in their new diets. Cereal has to be an adaptable, crucial ingredient in whatever new thing customers want to eat, becoming a go-to in customers’ changing breakfast — or lunch, dinner, or snack — routines. 

“I want people to just go, ‘Wow, I never thought of that, I want to try it,'” says Shirpka.

 Kellogg’s comeback

However, Kellogg’s problems cannot be solved simply by forcing customers to view cereal in a new, culinary light.

“More radical innovation in cereal — organic or via M&A — in the US will be needed, and the company’s goal to ‘win in breakfast, beyond the bowl’ may force them to make acquisitions outside their current categories,” Susquehanna analyst Pablo Zuanic wrote of Kellogg in a research note in November.

The company is debuting more than 40 new products early next year, including To Go Breakfast Mix, intended to be eaten from the pouch without milk. The focus is far from exclusively on cereal, as Kellogg attempts to expand its snack food segment and boost its international presence. When it comes to existing breakfast products, the company is removing artificial colour and flavours, as well as reworking the recently struggling health brands Kashi and Special K to greater focus on natural and organic food.

Kellogg's cerealsKellogg’s

Analysts’ evaluations of the company are also beginning to improve.

“For a traditionally slow and sleepy company, we were impressed by the significant changes CEO John Bryant put it place,” Credit Suisse analyst Robert Moscow wrote in a research note in which he upgraded the stock to outperform from neutral. “Kellogg is making an enormous commitment to bring new Millennial consumers to the franchise by improving the quality of its food.”

Another sign of light peaking through the clouds: after a few years of decline, Kellogg reported in November that morning cold cereal sales are finally flat. So, while actually growing sales will likely require shoppers to reconceptualize cereal, the industry may have hit the limit on shoppers ditching their morning bowl for breakfast.

It’s been a rough couple of years for cereal business, but the future of Kellogg is starting to look brighter — or at least different than it did earlier this year.

NOW WATCH: How food videos from ‘Tasty’ took over your Facebook News Feed

Follow Business Insider Australia on Facebook, Twitter, and LinkedIn

Tagged In

kellogg retail