- Cereal sales are up 11.8% so far in 2020, compared to the same period last year, according to Nielsen data.
- Industry giants like Kellogg’s, General Mills, and PepsiCo have said cereal sales are booming as people eat breakfast at home.
- Buzzy startups like OffLimits and Magic Spoon are now trying to cash in on the breakfast boom, as big name brands from Dunkin’ to Disney form partnerships to create their own cereal lines.
- Visit Business Insider’s homepage for more stories.
Anything can be breakfast food, if you want it to be.
At least, that’s what Kraft Mac & Cheese is theorizing with its latest marketing campaign. The brand is giving away limited-edition Kraft Mac and Cheese “Breakfast Boxes,” and advertising the noodles as a breakfast option on social media.
It’s no surprise that Kraft wants to get into the breakfast game. As the coronavirus pandemic stretches on, many Americans’ morning routines have been completely revamped.
Fast-food chains including McDonald’s, Dunkin’, and Panera said that breakfast sales have been hardest hit during the pandemic, and continue to drag down overall business.
“There’s not much recovery in the breakfast day part right now. In terms of day part, breakfast has dried up,” Panera CEO Niren Chaudhary told Business Insider.
Cereal giants are celebrating the return of breakfast at home
One of the biggest winners of this emerging trend has been cereal, a breakfast category that has witnessed sales decline over the last four years, in part because millennials were too lazy to make themselves breakfast at home, Nielsen data shows.
But in 2020, cereal sales have grown 11.8%, to $US5.4 billion, through the week ending July 25.
Sales are additionally up 6.7% over the last 12 months, Nielsen said. Prior to this recent surge, cereal sales had dropped at least 1% year-over-year dating back to 2017.
Now that many Americans are stuck at home, cereal is once again a convenient option for people unable to pick up a bagel or coffee on their way to work.
General Mills reported in early July that its net sales grew 16% in its most recent quarter, driven by meals, banking, and cereal categories. US cereal sales were up 26% in the period, with the company announcing in last month that it planned to add up to 40 new cereal supply-chain partnerships.
PepsiCo has seen similar success with its Quaker Oats cereal and oatmeal lines. The company reported in mid-July that Quaker’s organic revenue increased 23% in its second quarter, driven in part by “increased breakfast occasions.”
Kellogg’s also reported in late July that net sales grew 9% in its most recent quarter. On a call with investors, CEO Steven Cahillane said cereal consumption in the US was up almost 16% compared to last year.
New competitors are now trying to enter the cereal game
With cereal sales on the rise, some buzzy startups are trying to cash in. One of the biggest names in the breakfast startup world is Magic Spoon, a direct-to-consumer, keto-friendly line of cereals.
“We have seen a bigger demand in our cereal, from both new customers discovering Magic Spoon for the first time, whether from social media or word of mouth, but also our longtime customers who have been ordering more cereal at a time while at home,” Magic Spoon cofounder Gabi Lewis told Business Insider in May.
OffLimits is another new trendy cereal brand that launched this summer. A box of OffLimits’ Dash cereal costs $US12, and has the added benefit of turning your cereal milk into cold brew thanks to a partnership with Intelligentsia Coffee.
Established cereal giants are also turning to partnerships. And new stakeholders, includigfast-food chains to Disney, seem happy to get their own small piece of the booming breakfast business.
Dunkin’ branded breakfast cereals are rolling out through a partnership with Post in early August. The two flavours – Dunkin’ Caramel Macchiato and Mocha Latte – are slightly caffeinated, with about 10% of the caffeine of a cup of coffee.
General Mills launched a cereal inspired by Disney’s “The Mandalorian” with Baby Yoda front-and-centre on the box. Kellogg’s recently rolled out “Minecraft Creeper Crunch,” referencing the video game.
And, of course, there’s the Kraft Mac and Cheese Breakfast Box – proving that a company doesn’t even need to change its recipe or branding to attempt to cash in on the growing demand for easy breakfast options at home. Kraft says that 56% of parents have served their children mac and cheese for breakfast more often during the pandemic, citing a survey of 1,000 people.
Time will tell if the current cereal renaissance sparked by the at-home breakfast boom will last. As both industry giants and startups make new investments, they’re banking on people continuing to eat cereal in the long term – even if growth slows as people return to their normal routines.
“It’s one to watch, obviously, but we’re pretty confident that the at-home consumption is going to remain elevated,” Cahillane said of cereal sales on a recent Kellogg’s investor call. “And we’re assuming a deceleration, obviously, from the height of it as people become more mobile and things do return back to normal, but we’re still seeing good overall consumption”