When General Mills leaders said a Kellogg cereal spinoff would be good for the industry, this is probably not what they had in mind.
Kellogg CEO criticized for saying more consumers could eat cereal for dinner as budgets tighten
While General Mills executives have also touted cereal’s affordability through the years, there is potential for these comments to damage the category the Golden Valley company has led for years.
The Minnesota Star Tribune
February 28, 2024 at 6:18PM
“Cereal for dinner is something that is probably more on trend now, and we would expect [that] to continue as that consumer is under pressure,” Kellogg CEO Gary Pilnick told CNBC recently. “If you think about the cost of cereal for a family versus what they might otherwise do, that’s going to be much more affordable.”
Kellogg has been promoting cereal for dinner since 2022, when it launched a contest encouraging consumers to “give chicken the night off.” Still, numerous media outlets jumped on Pilnick’s comments this week, and online discourse quickly turned sour, likening his words to the derisive “let them eat cake” sentiment the out-of-touch wealthy can have toward the struggling lower classes. Think Marie Antoinette during the French Revolution (allegedly).
Others defended the bowls of affordable calories as Americans spend a greater share of their money on food after years of intense inflation.
Executives at Golden Valley-based General Mills, which is the No. 1 cereal producer in the nation, have said the cereal category is better off when “everyone comes to play.”
“If you go back through history, when the two major competitors in the category are supporting it with marketing as well as innovation, the category does better,” Jon Nudi, then-head of General Mills’ North American Retail division, said last fall.
General Mills leaders and industry analysts have said some of the same things Pilnick did last week: that cereal is affordable and often gets a boost during tough economic times. The makers of Cheerios and Cinnamon Toast Crunch have not gone on national television to say cereal for dinner is “landing very well right now,” as Pilnick did, however.
Pilnick’s plea for cereal at suppertime comes as consumers are buying fewer boxes of Kellogg’s Frosted Flakes and other brands. Sales have been increasing, but that’s almost entirely from price increases. Store brands have also seen a boost.
The $10 billion U.S. cereal market has seen hefty inflation in recent years, including an average price increase of 13% last year, according to Circana. Kellogg brought the biggest cereal price hikes in 2023, raising prices 17%.
Kellogg spun off its cereal business into a stand-alone company in October. The remaining company, renamed Kellanova, focuses on snack foods like Pop-Tarts and Pringles.
The two companies announced the agreement Friday evening. The terms are effective immediately.
