Editor's note: This story is part of a series on the trends that will shape the food and beverage industry in 2021. You can find all the articles on our trendline.
After years of challenges, breakfast is experiencing a much-needed resurgence during the coronavirus pandemic that food manufacturers are optimistic could once again make it a standard part of the morning routine for more Americans.
"People are going to go back to work, but there will be residual behaviors that are going to stick. We believe that we have converted some folks for good," said Jeanine Bassett, vice president of consumer and market intelligence at General Mills, a maker of Total cereal, Bisquick pancake mix and Larabar. "This is really an unprecedented time to establish that beachhead you did not have before and build on it."
Before the pandemic, breakfast's iconic image as a time when families sat down together for what some consider the most important meal of the day had become an afterthought for many on-the-go consumers. Breakfast faced strong competition from fast-food chains, while healthy-eating people were clamoring for more nutrients and protein but less sugar.
Increasingly, people turned to portable options as they rushed out the door, like a cup of oatmeal or cereal, bar, breakfast sandwich or bowl. And CPGs, eager to keep even more people from fleeing breakfast or consuming it elsewhere, doubled down on these offerings.
A 2019 survey of 2,000 Americans by OnePoll and Sabra found the average person ate breakfast just three times a week, while 13% rarely, if ever, ate the meal. And Mintel found the importance of the breakfast occasion was shrinking. In 2018, half of consumers agreed breakfast is more important than lunch or dinner, compared to 55% four years earlier, the market intelligence agency said.
But the coronavirus outbreak has forced more people to work from home and children to attend school remotely. While families still have a hectic morning getting ready for the day, there is more time to have a breakfast that is a bit more leisurely — a change that provides food makers with the opportunity to reengage with consumers who may have altered their consumption habits or abandoned the meal altogether.
Back to the future
Analysts and food manufacturers concede many people will eventually revert back to the fast-paced lifestyle — providing a boost to bars, drinks and other offerings that have struggled during the outbreak. But some consumers will continue the breakfast habits they adopted during the last year. Consumers will have gotten used to their new morning routine, while others will value the benefits that go with a less hectic morning, including more time to connect with their family.
"The fact that we are going to have more people working from home is going to mean that some of the change we've seen around breakfast will stay put," said Neil Saunders, managing director with GlobalData. "It's almost going back to perhaps how it was in 1950s America when people did sit down at the breakfast table and they did have something to eat before going about their day."
Saunders estimated breakfast across the board has seen strong growth during the pandemic. Home consumption of pancakes was estimated to grow in 2020 by 25%, waffles 20%, breakfast sausage 16%, bacon 15% and cereal 11% from 2019, according to GlobalData. He said going forward, long-term product winners are likely to align with the push toward healthier items including smoothies, sous vide egg bites and better-for-you cereals.
Few categories have been benefited from the stay-at-home shift as much as cereal. After several down years, the $8.5 billion cold cereal category had started to rebound before the pandemic hit, and there is optimism the last 10 months could provide a further catalyst for future growth.
"The fact that we are going to have more people working from home is going to mean that some of the change we've seen around breakfast with stay put. It's almost going back to perhaps how it was in 1950s America when people did sit down at the breakfast table and they did have something to eat before going about their day."
Managing director, GlobalData
Millennials are consuming more cereal during the pandemic, with consumption up 13% from March to August 2020, outpacing the rest of the population, according to The NPD Group/National Eating Trends data.
At food giant General Mills, cereal revenue had flattened at roughly $2.3 billion for several years until a recent uptick before the pandemic. The resurgence picked up momentum during the outbreak as younger consumers pushed sales of Cocoa Puffs, Golden Grahams and Cinnamon Toast Crunch up more than 10%, while its top-selling cereal, Honey Nut Cheerios, jumped 8%. Kellogg reported in its third-quarter earnings in October that its net cereal sales in North America were up 9.4% for the 39 weeks ending Sept. 26. And Post Holdings said its legacy branded cereals such as Honey Bunches of Oats, Pebbles and Great Grains posted volume growth of 5% in its fourth quarter.
Children learning from home also are upping their cereal intake — oftentimes with their parents joining in — creating what the industry hopes is a lasting connection with the breakfast offering. Cereal makers like General Mills and Kellogg also are doing more to make their cereals more portable and conducive to on-the-go snacking, which should help as consumption patterns normalize. At the same time, manufacturers are churning out healthier products packed with vitamins, minerals, immune-boosting options and simpler ingredients that could attract shoppers keeping a closer watch on what they eat.
"It's going to be a resurgence in cereal," Bassett of General Mills said. "For some people it's coming back to cereal, for some people it's reinforcing their love of cereal, and so we think it's nothing but blue skies for the category."
A chance to capitalize
Elly Truesdell, who oversaw local brands and product innovations at Whole Foods Market before leaving in 2017 to become a partner at Almanac Insights, said the health trend could be especially beneficial for smaller breakfast brands. These include Magic Spoon or Three Wishes cereals as well as waffle mixes and frozen pancakes from companies like Kodiak Cakes or Simple Mills.
Bigger companies also stand to benefit. General Mills made a move for health-conscious consumers who may have stopped eating cereal for breakfast through rollouts such as Morning Summit cereal, which lists almonds as the first ingredient, and its partnership with GoodBelly on a probiotic cereal. Kellogg has introduced a granola smoothie bowl loaded with nuts, fruits, seeds and berries that only needs milk or water, and Greek yogurt giant Chobani has moved into oats and probiotics.
At BellRing Brands' active nutrition line Premier Protein, executives noticed that consumers were using its 30-gram high-protein shake, which contains antioxidants and vitamins, during the pandemic as an addition to coffees and smoothies. Nick Stiritz, director of marketing with Premier Nutrition, said these trends and other emerging consumer habits could eventually lead Premier Protein to develop a product extension or new flavors.
"We're in a highly dynamic environment that this modern world has never seen and it's more important than ever to stay close to what is going on in it," Stiritz said.
Still, Truesdell said large food manufacturers as a whole need to move faster to capture the recent shifts taking place in breakfast brought on by the pandemic. "They are just, honestly, a bit slower to react and I'm just not sure that the larger innovation has quite been there yet," she said.
Conagra Brands has experienced strong growth in many of its breakfast brands during the outbreak, including Banquet Brown ‘N Serve sausages, Mrs. Butterworth's and Log Cabin syrups, Reddi-wip Barista Series coffee creamer alternatives and Gardein plant-based breakfast bowls.
With in-home breakfast occasions on the rise and demand "remaining elevated," Conagra has spent more time and resources understanding why people are consuming different foods and what that could mean for the future of the segment, said Ashley Lind, director of demand sciences for the Chicago-based company.
Lind pointed to evidence of a permanent shift in breakfast habits that gives manufacturers like Conagra optimism. People have invested in their kitchens during the coronavirus, buying small appliances such as waffle makers and single-serve brewing platforms they will want to continue to use.
At the same time, new buyers are repeat-purchasing Conagra's breakfast products at higher numbers, the company said. Mrs. Butterworth’s and Log Cabin syrups have experienced a 10% to 15% increase in repeat purchases among new buyers who tried the products for the first time during the pandemic, compared to new buyers during the same time period a year ago.
"We're certainly evaluating breakfast opportunities," Lind said. "We definitely believe there will be some degree of stickiness to a lot of these behaviors."
To position itself for this behavioral shift, HighKey, a producer of low-carb, low-sugar cereals, muffins, cookies and other products, has more than doubled its R&D budget during the pandemic and introduced a slew of new breakfast offerings. In March, HighKey entered the cereal space for the first time, just four months after introducing a pancake mix. Then in August and September, it introduced banana bread and mixed berry breakfast biscuits as portable snacking options.
Joe Ens, co-CEO at HighKey, admitted the pandemic "wasn't the perfect time to launch a portable on-the-go bar." But the three-year old company was able to collect feedback from consumers so it could tweak its packaging and messaging to highlight how the taste was similar to products loaded with sugar and carbohydrates. Ens said the strategy could pay off later as shoppers, who have turned to indulgent comfort foods during the pandemic, look to eat healthier without sacrificing taste.
"We were ready to go and decided to take the risk. We're glad we did," Ens said, noting that despite slowness in the bar category overall, the product has done "pretty well" during its six months in the market.
With the vaccine rollout, there is optimism that a larger wave of consumers will soon start returning to work and school. As this takes place, Saunders said food manufacturers will need to review their breakfast portfolio, which was heavily skewed toward on-the-go offerings before the pandemic, to ensure they now have enough in-home meal solutions.
"Breakfast was never in danger of disappearing but it has been on the wane for a number of years and I think this has brought it right back," Saunders said. "Over the long term, there has to be a reassessment as to where the areas of growth in the market are and what the different manufacturers want to push."