General Mills is hoping that a $13 price tag on its latest health-conscious breakfast food doesn’t turn out to be a cereal killer.
The company, speaking at Tuesday’s Consumer Analyst Group of New York (CAGNY) conference, pointed at ways it hopes to revitalize the struggling cereal category, including its recently launched Morning Summit cereal, which carries a significantly higher price tag than Froot Loops or Total.
“We’re innovating in new product forms that command premium price points, including our new Morning Summit product, which has almonds as the first ingredient and sells for $13 a box,” said Jeff Harmening, chairman and CEO of General Mills.
The health-focused cereal blends cereal flakes with almonds and dried fruit, and contains 15 grams of whole grain per serving (nearly one-third of the daily recommended allowance). For comparison, a box of Multi Grain Cheerios sells for about $3.50, while Lucky Charms sells for around $3 per box.
Harmening said that cereal sales, an $8 billion market, are showing some signs of rebound. While they were flat in 2019, that’s an improvement over the low single-digit declines of a few years ago, he said.
At General Mills, new products are bringing growth, including 2 oz. Cereal cups, which are being distributed in schools and convenience stores, and partnerships with Nestle. The company also raised prices last year.
“Our strategy to drive compelling cereal growth is centered on launching compelling innovation that offers taste, convenience, and health benefits, while investing in brand building that engages consumers and gives them a reason to walk down the aisle,” he said.
The up and coming star at General Mills, though, might have nothing to do with breakfast (or yogurt, or tacos, two of its other big categories). Natural pet foods, like Blue, are poised for substantial growth, said Harmening.
The company saw a $1 billion increase in sales last year and household penetration has nearly doubled over the past two years.
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