Kellogg Says Good-Bye to the Cereal Aisle—and Moves In With Produce
Kellogg cereals are popping up in all sorts of unexpected places. This month, the onetime king of American breakfast opened a snazzy new “branded boutique” in Times Square, where for upwards of $7 a bowl, curious diners can scarf down their Corn Flakes garnished with such trendy ingredients as green tea powder and pistachios. Now Kellogg is making a move that could land it in other previously virgin territory, this time a lot closer to more Americans’ homes.
Dogged by years of sliding sales for its flagship ready-to-eat cereal brands, Kellogg is looking to break out of the stodgy cereal aisle and sell its boxed flakes alongside fresh fruit, following other big food makers who’ve long cast an envious eye at the bustling real estate surrounding the perimeter of your average grocery store. The cereal giant is working with the Midwestern supermarket chain Meijer to feature Kellogg cereals next to the bananas, strawberries, or blueberries that the company is increasingly featuring in its marketing, Quartz reported.
Don’t kid yourself, though—this is hardly just about making it more convenient for shoppers to snap up their bananas and Rice Krispies in one fell swoop. As consumers have become ever more wary of the kinds of processed foods that typically choke the middle aisles of most supermarkets, they’ve gravitated to the perimeter of the store, where the fresher fare, such as produce, meat, seafood, and dairy, is placed. “Shop the perimeter” has become something of a mantra for consumers looking to avoid the bugaboos of the processed food industry—artificial ingredients, preservatives, GMOs—so much so that the center of any number of grocery stores has taken on a dying-mall vibe, evidence of the trend that has seen sales of packaged foods decline by 1 to 2 percent a year for the past few years even as sales of organics have grown by double digits.
Behind the cheery slogans and bright packaging, supermarket product placement has long been a cutthroat business, and as Kellogg’s incursion into the produce section suggests, it’s probably only going to get more competitive. There’s only so much real estate to be had around the perimeter of any given store; move everything there, and you’d not only have the retail equivalent of a doughnut, but the perimeter would become too much like the center that many shoppers are trying to avoid.
Couple that with Kellogg hardly being alone among big food makers in scrambling to cope with a sea change in consumer demand, one that has seen the top 25 food and beverage brands lose close to $20 billion in market share since 2009, as Fortune reported last year. Battling over the limited space on the grocery store perimeter to bask in its perceived aura of freshness may only go so far, but big food needs all the help it can get. Yes, the general public might still be susceptible to the subliminal notion that the color green on food packaging means “healthy.” But more and more, consumers’ suspicions about processed foods have become harder for big food to work around. The new federal dietary guidelines, for example, essentially encourage Americans to shop for fresher whole foods, and a revamped nutrition label requires food makers to list the amount of added sugar in a product. Even the word “natural”—long a favorite in food marketing because it has no legal definition—is coming under renewed scrutiny.
So don’t be too surprised if in the not-too-distant future, you stumble across sales reps from Kellogg and General Mills duking it out in the produce aisle at a grocery store near you.