Minnesota food companies rejoice: Cereal's not just for breakfast anymore

It was 8:30 p.m. on a Monday when Joanne Brickles realized she had not yet eaten dinner.

Weary of cooking, doing dishes and paying meal-delivery fees, Brickles filled a plastic cup with Cinnamon Toast Crunch and milk.

"I am single and I don't have roommates, so cooking for one person is kind of a pain," she said.

Later that night, Brickles took to Twitter: "Reached the pandemic point of not wanting to cook or use real dishes, so cereal in a plastic cup will be Monday night dinner."

She's not alone. Droves of consumers stuck at home during the pandemic are returning to cereal.

For years, the ready-to-eat cold cereal category was in decline as consumers gradually shifted toward on-the-go products or breakfast foods high in protein. But the pandemic has created the perfect storm for cereal's resurgence: less time spent away from home, economic anxiety and cooking fatigue.

That bodes well for several Minnesota food companies, including Post Consumer Brands and General Mills, which are both cereal heavyweights.

"The pandemic has made people fall in love with cereal again," said Tom "TD" Dixon, chief growth officer for Post Consumer Brands, the Lakeville-based cereal business owned by Post Holdings of St. Louis.

"Clearly you'd never hope for a pandemic. But with the pandemic, for us, came an opportunity to have a bunch of new consumers try our products," said Jon Nudi, president of North America retail for Golden Valley-based General Mills. "We know folks are home eating breakfast more than ever."

Cereal sales surged 26% between March and May as Americans hoarded shelf-stable foods and personal care products such as toilet paper. Over the summer, cereal's sales growth slowed only to see them tick up again in the fall with many kids enrolled in distance learning and eating all their meals at home, Nudi said.

For years, sales of ready-to-eat breakfast cereals were in steady decline as consumers eschewed sugar and flocked to protein-rich foods.

"It was a category that was demonized by some," said Darren Seifer, a food-industry analyst with the NPD Group. Cereal was still the No. 1 breakfast food, but its lead was being eroded by eggs, hot cereal, protein bars and yogurt.

Pouring a bowl of cereal may be easy, Dixon said, but it didn't fit in with many consumers' busy lives.

"The hustle-and-bustle life we've all lived for so long, that family bonding moment in the morning had sort of dissipated," he said.

But in 2019, cold-cereal sales flattened, giving leaders at General Mills hope that the slow bleed was over. In the two quarters immediately before the pandemic erupted in America, the maker of Cheerios and Lucky Charms posted modest sales growth in its hallmark category.

The pandemic, though, sent those numbers higher than anyone in the industry could've dreamed. For the past 12 months, which includes several pre-pandemic months, cold cereal sales in U.S. retail rose 7.7% — with General Mills up 9.5% and Post up 5.3%, according to Chicago-based market research firm IRI.

"We believe the work we've done before the pandemic [to make our products better] is really paying off now," Nudi said.

The pandemic has upended many aspects of American life, including how and where we eat. It also has removed many of perceived barriers that kept consumers from eating cereal.

Without an office or school building to dash off to every morning, breakfast has become an eating occasion again.

Year-over-year retail sales of fresh eggs are up more than 13%, and more than 10% for hot cereal such as oatmeal, according to IRI.

"Since we are not commuting anymore, we have a little bit more time to make breakfast foods," Seifer said.

Carrying a cereal bowl from the kitchen to the desk is no longer inconvenient.

"For those who need to get to work right away," Seifer said, "it is a meal that is ready in literally seconds."

The economic turmoil caused by the pandemic also has played a role.

"Consumers in general are trying to make their grocery dollars stretch, especially if they are anxious about their job," Seifer said.

And with a larger portion of budgets going toward home groceries rather than eating out, consumers are more wary of wasting money and food, leading many toward shelf-stable foods.

Dieting trends — such as high-protein, keto or low-sugar — that previously may have caused many consumers to stray from cereal are less of a priority for many people during the pandemic.

"Nutrition is taking a bit of a pause right now," Seifer said. "When you think of the hierarchy of needs, for many consumers it's about hunkering down and getting through the day."

So not only is cereal relatively affordable and fast, it is also nostalgic, Dixon said.

"Consumers are retrenching. That's this notion of the need to feel safe, the need to feel secure," he said. "With that, folks have sought comfort, and cereal is a comfort food."

But this sales bump won't last forever.

"After COVID, there might be some lingering anxiety about being in crowded places and some corporations may allow people to work from home out of comfort, so there may be some sustained benefit for a while," Seifer said. "But for the most part I think it is temporary."

Leaders at General Mills and Post are trying to find ways to keep some of their newest, youngest customers engaged in a post-pandemic world.

General Mills has invested heavily in data and analytics in order to use its digital advertising dollars in more targeted ways, Nudi said.

Post Consumer Brands is teeing up new ways to make cereal more snack-ready for when society is again more mobile.

"You've got a whole new generation of consumers that have [fallen] in love with cereal for the first time. We won't keep all of them but we will keep some of them," Dixon said. "They've discovered it tastes good and that will benefit the industry as a whole."

Kristen Leigh Painter • 612-673-4767