According to outside experts, there are a few culprits for the declining demand for cereal: People are consuming less milk, eating fewer carbs and looking for lower-sugar foods to feed their kids, while favoring higher-protein alternatives like Greek yogurt or protein shakes for breakfast.
Cereal is also losing ground to easier, more convenient items such as protein bars that can be tossed into a briefcase or eaten in the car.
And competition from fast-food chains is increasing as the economy improves and more people hit the drive-through in the morning.
"Manufacturers … face a ton of competition," said Jared Koerten, research analyst at Euromonitor International. "In that environment, raising prices is one way they can try to combat the volume losses."
But raising prices can be a double-edged sword, Lash pointed out. "Higher prices could constrain volume growth, particularly if customers balk at the higher price tag," she said. "Consumers aren't willing to pay up if they don't see the added value… (They) are willing to pay up when they do see that."
To make higher prices more palatable, companies have been aggressively catering to the consumers who demand high-protein, minimally-processed products by rolling out new products like granola and muesli, not to mention overhauling their traditional recipes to cater to shoppers who want gluten- and GMO-free options.
Cereal companies also are using a new sizing trick to raise prices right under our noses by selling us more large packages.
When Post Holdings told investors that profit declines had slowed in its most recent quarter, President and CEO Rob Vitale said the sale of bigger packages played a role.
"We continue to see a migration of larger package sizes which bodes well for our combined business," he said, noting that extra-large boxes and bags both saw increases.
Shoppers are conditioned by a warehouse-club mentality to think that bigger is a better value, but they likely don't realize that this isn't generally the case when it comes to cereal, said Teri Gault, founder and CEO of TheGroceryGame.com, a coupon and saving website.
"Rarely do we find that the biggest box is cheaper per ounce," she said. "Usually the medium size is less per ounce."