Monica Pujdak usually starts her day with an egg, or skips breakfast altogether when pressed for time. “I’m more of a brunch person," said Ms. Pujdak, a 23-year-old who lives in downtown Toronto.
Cereal? Almost never.
She’s not alone. North American cereal sales have been steadily declining for years as busy consumers are faced with less time for breakfast, and an array of healthier choices they can dash out the door with.
Kellogg Co., maker of Rice Krispies and Corn Flakes, said cereal sales fell by 4 per cent in the latest quarter and 2 per cent for all of 2013, as consumers increasingly switch to other foods.
“We are losing people to other categories such as eggs, toast, peanut butter. We’re not losing people to any one category in particular,” said John Bryant, Kellogg chief executive officer.
Matthew Grainger, a Morgan Stanley equity analyst, said he is concerned by weakness in such core Kellogg’s cereal brands as Special K and Mini-Wheats.
Mr. Bryant called the move away from cereals for breakfast an “unconscious migration” – people are eating less cereal without being aware of the fact.
Michigan-based Kellogg is responding by launching breakfast shakes and protein bars. It’s also slashing its global work force while expanding some plants and closing others, including one in London, Ont., that is slated to shut this year.
“There’s a sea change going on,” said Larry Johnson, head of the food and beverage practice at U.S. consultancy Stanton Associates.
People younger than 30 are more likely to eat food that is convenient, as well as lower in fat, carbs and gluten, rather than have a bowl of cereal and milk, Mr. Johnson said in an interview from Los Angeles. “They are the proverbial snackers, as opposed to sitting down at the breakfast table.”
Breakfast, he said, is no longer seen as one of the three square meals of the day and has become just another “snacking occasion.”
“What we’re seeing is consumers are leaning to convenience for alternatives. It’s not a sit-down-at-the-table culture,” said Mr. Johnson. “Nutrition is a concern. People who are into nutrition are looking for ways to limit fat, increase fibre and raise nutritional content,” by eating such food as Greek yogurt with nuts.
Mr. Johnson said breakfast accounts for one in five visits to restaurants in the United States, a sign the market is substantial. It’s what the diners select from the menu that’s a problem for cereal makers.
On a conference call with analysts on Thursday, Mr. Bryant said Kellogg needs to do a better job encouraging people to eat cereal, without worrying as much about how rival cereal brands are selling. Other food – not other cereal – is the enemy. (Rival General Mills Inc., which makes Cheerios, has also seen declines, but managed to boost cereal sales lately.)
For the three months ended Dec. 31, Kellogg posted $3.5-billion (U.S.) in overall sales, a decline of 1.7 per cent from a year earlier. Profit was $818-million, including a substantial boost from asset repricing, reversing a $32-million loss in the year-earlier quarter. For 2014, Kellogg is forecasting a sales rise of 1 per cent.
Mr. Johnson agrees with Kellogg’s Mr. Byant – breakfast is still a massive market. At Kellogg, the sale of “morning foods” in North America was $3.4-billion in 2013, a figure that is about 25 per cent of total revenues and the company’s biggest – albeit declining – segment.