Cold cereals must do something drastic – and quickly.

 

Tom Dougherty, CEO – Stealing Share

1 October 2014

The layoffs at General Mills is only the beginning

A few months ago, we took a hard look at the cold cereal breakfast brands and found that the old model was broken. There were so many brands with so many variations inside those brands that they were, in effect, cannibalizing a market that was shrinking due to changing eating habits.

People were moving away from sugary cereals to other things for breakfast, such as yogurt or breakfast bars (or fast food, hence the many new fast food restaurants entering the category). Therefore, it comes as no surprise to find out that General Mills is once again planning to cut jobs as revenues decrease.

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What will become of General Mills?

Now, General Mills makes more than cold cereal. It also owns Yoplait yogurt as well as the Betty Crocker and Green Giant brands. But the current layoff comes two years after it laid off more than 800 workers. So something is up.

This comes as the processed food industry is in decline as consumers are finding other options, either making meals at home or going through quick-serve restaurants (QSR) that attract both sides of the eating spectrum.

As we pointed out in the study, the industry, especially in the cereal space, has become so over saturated that consumers basically ignore them, whether their eating habits have changed or not. It’s a category that’s trying to fight on taste with old-style marketing.

As we’ve learned from working in the breakfast category, winning in a daypart for a food maker is about being in the considered set because few people eat the same thing every day.

There are other issues. A strategy we suggested in the study is that cereals should elevate the category of cereals instead of making different versions of the same brand. (General Mills is planning yet another version of Cheerios with added protein.) It’s not a strategy we usually suggest – we help clients steal market share from their competitors – but the category is in crisis. It must must build back up the category.

The elimination of jobs at General Mills is only the beginning.

See more posts in the following related categories: cold cereal category General Mills General Mills layoffs

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