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Ready-to-eat cereal is a culinary bedrock of American life. Giant packing containers of Cheerios and Frosted Flakes have fuelled household breakfasts for nearly a century. But cereal is beginning to lose its snap, crackle and pop.
Health-conscious consumers are swapping chilly cereal for smoothies, in a single day oats and eggs. Only 12 per cent of American households eat cereal every day, in accordance with a latest survey by CivicScience.
Consumption peaked within the mid Nineteen Nineties. Annual gross sales throughout the business have fallen from almost $14bn in 2000 to about $10.4bn in 2019, knowledge from Euromonitor exhibits. The pandemic gave demand a jolt. But the reprieve didn’t final. Volume gross sales of ready-to-eat cereal within the US fell 5.4 per cent final yr after dropping almost 11 per cent in 2021.
Big Cereal’s diminished presence in American pantries has put corporations at a crossroad.
At Kellogg, administration is forgoing the slow-growing North American cereal enterprise. It is spinning out the division housing manufacturers like Special Ok and Raisin Bran into a brand new firm known as WK Kellogg. This will go away Kellogg, which will likely be renamed Kellanova, with its fast-growing snacks enterprise. The division, house to Pringles and Cheez-it, accounted for just below half of Kellogg’s whole gross sales final yr.
Kellogg stated the separation will create two stronger, extra targeted corporations. But it’s laborious to see how a standalone cereal firm can outperform. Investment is required to revitalise drained manufacturers. That is at odds with plans to chop prices and enhance ebitda margins. The new firm seems extra like soggy leftovers.
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