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Marketplace Morning Report

Kellogg’s tries breakfast without the spoon

Adriene Hill Nov 4, 2013
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Kellogg announced big staff cuts today — 7 percent of its work force. That’s about 2,200 people.  It’s cutting costs and trying to boost profits, because cereal just isn’t selling the way it used to. 

Cereal got its start as a health food — a super convenient health food (You don’t have to cook your breakfast anymore! Just pour it!).

But today, cereal is a drag; people want to be free of the tyranny of spoons!

“Today, you’ve got the splurge of breakfast bars, those breakfast sandwiches that you throw in your microwave and they heat up in a minute, and then you’re in your car eating it,” says Brian Yarbrough, analyst from Edward Jones.  We want to multi-task our breakfast. “That saves you 15 minutes in the morning,” says Yarbrough. 

Our inability to sit to eat is one of Kellogg’s problems, leading to a 2 percent decline in sales of breakfast foods.  Another issue, say analysts, is that Kellogg needs to innovate to keep up. 

Show us a little sparkle in the cereal aisle.

“There has been further innovation in other breakfast categories,” says Erin Lash, an analyst at Morningstar. “Yogurt is a category where there has been a lot of innovation.” 

Those yogurt guys are always so ahead of the curve. 

Kellogg’s innovation is probably not going to be tropical marshmallow flavored Special K.  Sorry.  No such luck.

 Instead, says IBISWorld cereal analyst Jeffery Cohen, expect  more “cereals enhanced with fiber, cereals that our full of grains.”  Cereals that adults want-to want to eat. 

And, Kellogg knows that for some people, a bowl of cereal just isn’t going to happen.  So it’s introduced other products, like Kellogg’s To Go, a spoon-free breakfast shake. 

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