Leaders in the RTE cereal category at either end
According to Chicago-based market research firm IRI, General Mills, Inc. and Kellogg Co. jointly control 60% of dollar sales in the ready-to-eat cereal segment. The acts of the two corporations significantly impact the state of the category. The category leaders have been living somewhat different lives over the last six months.
The union that represents about 1,400 workers at cereal plants in Battle Creek, Michigan, and Kellogg have been embroiled in protracted talks since October 5. The management team at Kellogg’s has been battling industry-wide supply chain delays that have impeded the company’s cereal business growth for almost seven weeks. Now, they are also facing the difficulty of hiring and onboarding temporary employees.
The chairperson, president, and CEO of Kellogg, Steven A. Cahillane, stated that the firm is by no means “complacent” during a conference call with analysts on November 4.
“We face formidable obstacles ahead of us,” he remarked. However, we are fairly certain that we won’t face any kind of long-term or permanent disadvantage. We’ll get over this temporary situation together.He added that management had been aware for several months that the union workers’ contract was set to expire on October 5 and had been making preparations of various kinds, including creating an inventory.
“The Memphis fire made building inventory a little bit challenging,” Mr. Cahillane stated. However, we have also sent out our white-collar employees. To get the plants going and to keep them going, we have hired outside personnel. They are becoming more productive every single day. In order to further mitigate, we have also made use of our global cereal supply chain network. Therefore, in addition to working extremely hard to get our employees back to work, we are also successfully and steadily mitigating the consequences of the strike on two fronts.
On November 22, Kellogg met with union representatives to attempt to negotiate a new deal once more, but the corporation said the next day that talks had broken down.
The corporation released a statement on November 23 saying, “We recognize the hardship that this prolonged strike represents for our employees.” “We are left with no choice but to best serve the short- and long-term interests of our customers and consumers by moving to the next phase of our contingency plans after 15 negotiation sessions in 2021— and no proposals put to membership for a vote.”
According to Kellogg, the plan calls for maintaining the use of temporary laborers to run operations and, in certain situations, for employing full-time substitutes for striking employees.In September, Kellogg announced that it would cut 212 jobs at its Porter Street RTE cereal factory in Battle Creek, just before the contract with union workers expired. The layoffs will occur within the upcoming these are a part of the company’s endeavors to simplify its RTE cereal manufacturing process in North America and last for two years.
Similar to Kellogg, General Mills has been battling supply chain problems, which group president of North America Retail Jonathan J. Nudi referred to as practically “whack-a-mole” in late September. However, Minneapolis-based General Mills has persisted in expanding its RTE cereal business despite facing obstacles, in contrast to Kellogg.
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During a presentation on September 8, Mr. Nudi stated, “As a company, our top priority has been to compete effectively across our core business.” “Over the past three years, we’ve strengthened our competitiveness in North American retail by leveraging stronger execution and support behind brand growth and innovation. I’m really proud of this accomplishment. It’s never been more apparent than in the US cereal market, where General Mills has increased its market share for 34 straight months over the past four years.
“Our success in cereal has been largely attributed to our outstanding marketing and creative use of the greatest brands available. With creative partnerships and taste-focused marketing for Cinnamon Toast Crunch, new product announcements for our Cheerios and Lucky Charms brands, and enjoyable seasonal activities, we’re carrying on that approach in fiscal ’22.
A number of new items will be added to General Mills’ RTE cereal assortment later this year and in the first half of 2022, the company just announced. Reese’s Puffs Cluster Crunch, Strawberry Banana Cheerios, Cinna Graham Crunch, and PJ Masks Cereal are among the new goods.
With the introduction of Ratio Keto Granola, General Mills is extending its range of granola bars and yogurt-cultured dairy snacks into the RTE cereal market, slightly over a year after introducing the new Ratio brand. Toasted almond and coconut almond will be the first two tastes offered in the new collection.
Plentifull is a new cereal that will be released. According to General Mills, the new brand is prepared with “either real peanut butter or almond butter and 32 grams of whole grain (over half of the Whole Grains Council’s recommended daily serving for adults) per serving.” There will be two flavors of Plentifull: peanut butter and cinnamon almond butter.