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Is Wheaties Dying A Slow Death?

Wednesday, 21 Mar 2012 | 12:53 PM ET
Boxes of General Mills brand cereal Wheaties
Stephen Hilger | Bloomberg | Getty Images
Boxes of General Mills brand cereal Wheaties

After nearly a nine decade run, the “Breakfast of Champions” is on the ropes.

Sales of Wheaties are down double digits for another year and the tailspin shows no signs of stopping. A brand that, in the 1960s, accounted for 6.5 percent of all of the cereal sold in the United States, now only has slightly more than 0.5 percent of the market.

“Wheaties had a clear brand identity,” said Lloyd Moritz, who as editor of “The Breakfast Bowl,” a blog dedicated solely to cereal, just might be the nation’s foremost expert on the topic. “The problem was they rested on their laurels.”

As other cereals evolved, new takes on the whole wheat flakes brand didn’t catch on from Honey Frosted Wheaties in the mid-90’s to more robust versions like Wheaties Energy Crunch in 2001 to Wheaties Fuel, which, despite big endorsements from Peyton Manning, Albert Pujols and Kevin Garnett, hasn’t gained any traction in the two years it has been on the market.

Excluding sales at Walmart and convenience stores, Wheaties Fuel sales numbered a measly $5.2 million over the past year, according to SymphonyIRI, a Chicago-based market research firm.

In total, yearly Wheaties sales has brought in $38.7 million, down 18.6 percent versus a year ago. Total boxes sold are under 10 million, down 22.5 percent, meaning roughly 4,000 fewer orange boxes are being sold in the US per day than were being sold just three years ago.

Industry insiders have speculated that Wheaties, like Corn Flakes, wasn’t healthy enough for the Fiber One crowd and wasn’t bad enough for those who wanted to eat Lucky Charms or Frosted Flakes.

“It’s OK to be healthy, but they just haven’t stood out,” Moritz said. “Cheerios has successfully rolled out new flavors and Special K has latched on to fitness consumers and the women’s market.”

Wheaties parent company, General Mills , reported earningson Wednesday, with shares trading down on the news that consumers were buying less because of the higher retail prices to make up for higher commodity costs. Stars of the portfolio of General Mills, which owns 32 percent of the US cereal market, including Honey Nut Cheerios, Peanut Butter Multigrain Cheerios and Cinnamon Toast Crunch have helped stem further losses. (Track GIS Stock and News Here.)

Executives with General Mills declined to comment on this story.

Wheaties was invented in 1922 by a health clinician in Minnesota, who accidentally spilled a wheat mix on a stove. When the product hit retail, it was sold by General Mills predecessor Washburn Crosby as Washburn’s Gold medal Whole Wheat Flakes. The name was soon changed to Wheaties.

"It’s OK to be healthy, but they just haven’t stood out." -Blog Editor, The Breakfast Bowl, Lloyd Moritz

Wheaties was one of the first brands that made its name on sports marketing. In 1934, New York Yankees first baseman Lou Gehrig was the first to appear on a Wheaties box. Over the years, standout athletes and champions in every sport had their image on a box, including Michael Jordan who was featured on a record 18 different boxes throughout his career.

Before Nike or Gatorade claimed their place as “performance-enhancers,” professional athletes convinced impressionable young children that if they want to make it big the message was “Better Eat Your Wheaties.”

Since making a Wheaties box was seen by so many as the pinnacle honor in sports marketing, athletes didn’t hesitate when the brand only offered a couple thousand dollars to be on a box. That was until recent times, when that kind of money became more laughable and Wheaties started losing its cache.

"MISSING THE STARS"

In 2002, halfpipe Olympic silver medalist Danny Kass was asked by a Baltimore Sun reporter if his performance at the 2002 Olympics would be good enough to land him on the Wheaties box.

“I don’t think I’ve ever eaten Wheaties in my whole life,” the 19-year-old Kass said at the time. “If I was on something like that, I’d probably want it to be like Count Chocula or something cool.”

Moritz admits that the cereal space is as much about the packaging as the content so they fact that athletes and agents don’t see Wheaties as appealing anymore can’t be ignored.

“They used to have some really good stars on their boxes,” Moritz said. “We haven’t seen the same high-profile guys in recent years.”

Instead of fresh blood, marketers for Wheaties recently elected to go back to the past. The three newest athletes on Wheaties boxes are actually old ones: Bruce Jenner, Mary Lou Retton and Muhammad Ali.

Betting on collectors boosting sales is a tough bet, as more people seem to be saying they’re less excited about what’s actually in the box.

In a Twitter poll, with 258 of my followers as respondents, only 10.1 percent said they had eaten Wheaties this year. The largest percentage of people (40.7 percent) admitted they hadn’t eaten the cereal in at least 10 years, with more than 1 out of every four (26.7 percent) saying that they never even had a spoon of Wheaties.

“Wheaties is such a small brand now,” Moritz said. “You wonder if it gets much worse how much pressure will be on General Mills to just drop it.”

Questions? Comments? SportsBiz@cnbc.com

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