Cereal market declines due to alternatives, demographic changes

[Courtesy of Nongshim’s Kellogg]

The cereal market, once a popular choice for a quick breakfast in South Korea, is shrinking rapidly. The decline is attributable to a decrease in cereal consumption among students and the rapid growth of home meal replacements (HMR) during the Covid-19 pandemic. In response, cereal companies are adapting by introducing products that align with the “healthy pleasure” trend, such as low-sugar cereals and convenient protein-rich cereal bars.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on Tuesday, the Korean cereal market size decreased from 280 billion won ($204 million) in 2020 to 233 billion won in 2022, and further down to 213 billion won in 2023. Nielsen’s data also indicated a decline, with the cereal market size dropping from 220.6 billion won in 2022 to 204.3 billion won in 2023.

Market watchers cite several reasons for the shrinking cereal market, including the normalization of outdoor activities post-pandemic, competition with other food categories like HMR, the population decline, and a decrease in demand from children due to low birth rates. Additionally, salads and Greek yogurt have gained popularity, reducing the perception of cereal as a diet food.

“The variety of breakfast options, from meal replacements to coffee and sandwiches, and low-sugar, high-protein Greek yogurt, has influenced the decline in cereal consumption,” an industry insider said.

The HMR market has grown significantly, allowing consumers to enjoy a wide range of cuisines, including bread, Western, Korean, and Chinese food, conveniently at home. According to the Korea Rural Economic Institute, the HMR market size increased from 4.98 trillion won in 2021 to 5.85 trillion won in 2022 to 6.5 trillion won in 2023, with continued growth expected this year.

Cereal companies are responding to this development by launching low-sugar products and protein-rich cereal bars to cater to a broader customer base. The cereal bar market, which was about 90 billion won in 2023, is growing by 5 to 10 percent annually. Orion dominates the market with over half the market share, while Dongsuh Foods’ Post and Nongshim’s Kellogg have also entered the market.

Post’s market share in the cereal bar market has grown significantly, from less than 1 percent in 2017 to nearly 17 percent in the first half of 2024. Post continues to expand its cereal bar product line, and recently launched its Post Energy Bar Mini. Kellogg has focused on introducing healthier cereals by reducing sugar and enhancing nutrients. For instance, 2023’s “Dark Choco Protein Delight” contains chocolate but increased protein content while containing 25 percent less sugar. The “Caramel & Pecan Protein Delight” launched in May 2024 has 50 percent less sugar than its predecessors.

Cereal companies are also paying attention to the growing demand for cup cereals among single-person households. Both Post and Kellogg have introduced granola and almond flake products in cup cereal formats. Kellogg, which first launched cup cereals in 2016, recently revamped its cup cereal offerings. The cup cereal market is expected to grow by about 37 percent in 2024 to hit an annual size of 10 billion won.