Cereal killers: Americans’ new breakfast habits

Last quarter, Kellogg reported a 3 percent drop in revenues for its morning foods unit, while General Mills’ cereal division reported a 2 percent drop.

“Not all consumers choose a bowl of cereal and milk,” Kellogg said in a statement. “For them, we’re developing foods that provide the benefits of cereal in portable and convenient formats.”

Those new “formats” include breakfast bars and shakes. Sales of Kellogg’s Pop Tarts are holding up well, and General Mills’ granola sales jumped more than 40 percent in a month, according to Nielsen. Both have been playing catch-up to the Greek yogurt craze, which has helped propel the yogurt category to the number two position for breakfast at nearly $7 billion in sales.

“Five years ago (Greek yogurt) was a novelty in this country. Now Greek is about 40 percent,” said Baumgartner. He adds the breakfast table will only get more competitive as new players vie for “share of stomach.”

Those new players include a growing number of fast food chains. Yum Brands’ Taco Bell is rolling out a national breakfast menu, joining other newcomers in recent years like Subway and Wendy’s (which has since scaled back its breakfast experiment). McDonald’s has started serving “Breakfast After Midnight” at some of its 24-hour stores. Nation’s Restaurant News reports the first meal of the day is a $42 billion business to the industry, and QSR Magazine claims the number of quick-serve breakfast items jumped 17 percent between 2009 and 2011.

What hurts cereal hurts milk. Milk sales have been on a gradual decline for years.

“Cereal and the use of milk is pretty well linked,” said Todd Hale, senior vice president of consumer insight for Nielsen.