Tony the Tiger Purrs

Jan. 11, 2022

Why branded RTE cereal is in a good place.

I’ve often said that, if branded companies were in a good position during the pandemic, makers of branded RTE cereal were in the best of all. People were stuck at home, especially for breakfast, and they wanted familiar brands. What’s more familiar (or convenient) than a bowl of Cheerios or Frosted Flakes?

A survey from Veylinx, which describes itself as “a consumer insights platform that uses behavioral research to predict purchasing habits,” took a look at just how loyal consumers are to those particular brands. It turns out: Quite a bit.

A hypothetical price increase from $3.29 to $3.49 had no effect on potential sales of Frosted Flakes; it made demand for Cheerios drop by only 1.5%. You have to get to a 50-cent increase for it to matter, and even then, the effect varies by consumer. Among those who eat two or more bowls a week of the stuff, demand drops by only 15% with that kind of an increase; for those who eat less than two, it plunges by 26%.

Another aspect of the study I found interesting was acceptance or rejection of bagged cereals. I started my food trade journalism career for a now-defunct magazine that covered packaging (in fact, Packaging was its name). Back then, bagged cereals were the Next Big Thing. They proceeded to remain the Next Big Thing for the next thirty years.

Someone once said that Wagner’s music is better than it sounds. The problem with cereals in bags is that the concept sounds better than it is. According to the Veylinx survey, 76% of consumers said they would purchase Frosted Flakes in a resealable bag, but when faced with an actual purchase decision, only 39% did.

I think I understand the mentality here. Cutting back on packaging by migrating from the traditional bag-in-box model is appealing from a sustainability standpoint, and who doesn’t want to support sustainability when talking to a pollster? But when it comes time to actually buy the stuff, you start to think of how fragile those flakes are, and how much stress they undoubtedly got subjected to in that unprotected bag, and do I want to feed my kids a breakfast of sugar-frosted crumbs?

As the Veylinx release says, with considerable wisdom, “consumers consistently overstate their interest and the amount they are willing to pay in traditional surveys versus real purchasing situations.”

In fact, packaging makes surprisingly little difference in cereal purchase decisions. Veylinx asked about a variety of alternatives to the traditional bag-in-box, including sustainable packaging, multipacks, single-serve pouches and resealable packages. Result: “The study found that most of these innovations did not drive higher demand than the standard Cheerios and Frosted Flakes boxes, regardless of the price point.”

What does this all mean? Well, if I were a c-suite executive at Kellogg, I’d be a happy camper right now. The big K just dodged a labor bullet and is now ready to go back to making money with long-established, long-familiar cereal products and packaging, with little imperative or motivation to change them. Tony the Tiger must be purring.

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