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In the ever-competitive world of breakfast cereal, Kellogg and General Mills are in a constant battle to win over consumers and boost profits. As breakfast preferences have shifted over the years, both companies have had to adapt and come up with new products to stay ahead of the game. The recent earnings reports from both companies show just how important it is to stay on top of the latest breakfast trends.
According to Euromonitor, the U.S. cereal industry has seen a decline in sales over the years, dropping from about $14 billion in 2000 to $10 billion in 2013. To win in this industry requires a whole-company effort, from marketing and leadership to research and development and smart investments. Both Kellogg and General Mills have been working hard to stabilize their cereal businesses and stay relevant.
Kellogg’s CEO, John Bryant, recently spoke about the importance of stabilizing the U.S. cereal business in a stable category, despite acknowledging that cereal is no longer a big bottom-line booster. However, Kellogg believes that cereal is still a relevant category, and they are succeeding in bringing consumers back into the category, particularly adults.
On the other hand, General Mills’ CEO, Ken Powell, believes that his company is much closer to the consumer now, which has helped them develop new products that meet consumer needs. He recently stated in an interview with The Street that when his development team has something they think is pretty good, they take it to a store or somewhere else and actually sell it themselves, getting direct feedback. This strategy has allowed them to stay on top of consumer trends and needs.
In terms of earnings, General Mills saw a 24% profit increase in its last quarter, with growth in key categories like cereal, meals, yogurt, and snacks. The company is also shedding non-core businesses like Green Giant and Le Sueur frozen vegetable business, while continuing to grow its Annie’s acquisition. Sales and distribution of Annie’s have grown 9.4% and 11% in the last year. General Mills is also investing in web series content to attract millennials and advance its consumer-first approach.
Kellogg, on the other hand, saw an 8.5% profit dip in its last quarter, marking its eighth in nine quarters of sales declines. Its snacks business fell 1.5%, while its morning foods business (including cereals) sank 2.6%, its third quarter in a row of decreased sales for each. Despite this, Kellogg is implementing zero-based budgeting, which has been adopted by many CPG companies to drive cost savings and efficiency.
In terms of marketing, General Mills is highlighting its Trix cereal artificial ingredient removal by hosting a contest in search of a real rabbit to showcase on boxes. The company has also veered into web series content, like its revamped French Toast Crunch and campaign to boost consumer re-engagement with cereal. General Mills recently hired Mindshare to take over its U.S. business and assist across the world, with the goal of advancing its consumer-first approach to growing its brands.
Overall, while both Kellogg and General Mills are fighting for market share in the cereal wars, General Mills seems to be winning the battle at the moment. Its focus on meeting consumer needs and staying on top of trends has helped it boost profits and grow key categories, while its marketing strategies have helped it attract millennials and advance its consumer-first approach. However, the breakfast cereal industry is constantly evolving, and Kellogg may still have a chance to come out on top with its zero-based budgeting and efforts to bring consumers back into the category.