General Mills Makes It Official: Sugar and Cereal Are Back Together
Key Insights:
Bucking recent conventional wisdom, General Mills is fine, just fine, with sugary cereals.
In a licensing deal with Hershey’s, General Mills recently debuted three new cereal lines: Hershey’s Kisses, Reese’s Puffs Big Puffs and Jolly Rancher, which features the flavors green apple and blue raspberry.
If that sounds like a lot of sugar in every spoonful, it’s because it is. The Hershey’s Kisses and Jolly Rancher cereals contain 12 grams of sugar per 1-cup serving. Reese’s Puffs Big Puffs contains 12 grams of sugar per 1 1/3-cup serving. Cheerios, by comparison, contains 1 gram of sugar per 1-cup serving. The American Heart Association recommends that women consume no more than 25 grams of added sugar each day. For men, the limit is 36 grams.
But sugar is also what turns a profit, analysts told Adweek.
“In the cereal category, the sugary stuff is actually what’s selling now,” said John Baumgartner, a senior equity analyst at Wells Fargo who covers General Mills. “Cereal’s one of the categories where people are splurging a bit more in terms of indulgence.”
In 2017, competitor Post Consumer Brands partnered with Mondelēz International to produce Oreo O’s cereal. In 2018, the two CPG giants teamed up again to create the Nutter Butter and Chips Ahoy! cereal lines. Later that year, Post also released a Nilla banana pudding cereal, along with Golden Oreo O’s. The five brands proved successful for Post based on Nielsen data, according to Baumgartner, generating $70 million in retail sales when analyzing the first 12 months each product was on the market.
In early 2019, Post and Mondelēz joined forces once again to create a line of Sour Patch Kids cereal. “It’s Not a Sour Prank!” reads a line from the official press release. In partnership with Hostess Brands, Post recently released a Twinkies cereal, which contains 16 grams of sugar per 1-cup serving.
As for General Mills’ new products, “I think they’re taking a page from Post’s playbook,” Baumgartner said.
According to new data from market research firm The NPD Group, nearly 90% of U.S. adults read nutrition labels on food packaging, and among that group, the top item they look for is sugar, followed by calories.
When asked about promoting a Jolly Rancher cereal brand at a moment when descriptors like “natural” and “organic” are all the rage, Hillary Balma, senior brand manager at General Mills, responded by focusing on variety.
“One cereal does not meet everyone’s needs, which is why we are working hard to ensure we have a cereal to meet nearly everyone’s individual needs,” she said, adding that General Mills oversees more than 100 cereal varieties.
While the health and wellness trend is disrupting the CPG industry, causing companies to reconfigure their portfolios and adjust their marketing messages, many people still want to treat themselves with selective indulgences, said David Garfield, global leader of consumer products practice at consulting firm AlixPartners.
“I think the products will find favor with their target audience,” Garfield said in reference to General Mills’ new cereal brands, “because they’re not trying to be the healthy start to your day.”
Another factor working in General Mills’ favor, Garfield argued, is honesty.
“General Mills is doing a good job about being authentic about their products,” he said. “If a product line is meant to be a better-for-you product, they are making sure that the functional health claims are real and substantial. And if a product line is meant to be a sweet treat, they’re transparent about it.”
Apart from a small nutritional section printed on the front of each box disclosing the total sugar content—along with total calories, saturated fat and sodium—the product packaging doesn’t actively boast about its sugar levels.
