Trying to counter squishy cereal sales, General Mills is launching its first totally new brand in 15 years, a fruity oat and corn concoction dubbed "Tiny Toast."
It's the type of innovation the U.S. cereal market could use, analysts say, but like all new cereals, it faces big obstacles. Building a new brand is usually more expensive and riskier than simply adding a new variety under an established brand — think Chocolate Cheerios.
The last totally new cereal from General Mills with staying power was Reese's Puffs, a solid seller launched in 1994 and made under license with candy maker Hershey.
But then there was "Harmony," an oat clusters and flakes cereal that debuted in 2001 but tanked within two years. Designed to meet women's nutritional needs, Harmony's slogan was "made just for a woman's body," according to "The Great American Cereal Book," a chronicle of breakfast cereal brands.
Indeed, for every hit such as Mills' Cheerios or Lucky Charms, there are a lot of flakes that flop. Remember "Wackies"? Probably not, the banana-flavored Lucky Charms spinoff lasted all of a year in the 1960s. Or how about "Powdered Donutz," a General Mills whiff from the early 1980s.
Tiny Toast, which will arrive on store shelves this month, features pieces of crunchy "toast" covered with tiny pieces of fruit. It's one of only a few breakfast cereal offerings flavored with real fruit, according to General Mills, which unveiled Tiny Toast on Monday. It comes in two flavors, strawberry and blueberry.
The whole grain oats and corn cereal is covered in strawberry or blueberry powder, and contains no artificial flavors or colors. It has nine grams of sugar per serving.
Tiny Toast, in development for more than a year, sprung from the idea of "real tasteful fruit cereals," said Alan Cunningham, General Mills' senior marketing manager for cereal innovation. "The reason for doing this product now is that it's really different. There are a lot of fruity cereals, but not one that smells and tastes like real fruit."
Golden Valley-based General Mills is positioning Tiny Toast as a family cereal, similar to Honey Nut Cheerios and Cinnamon Toast Crunch, two of Mills' most popular offerings. But Mills sees young adults ages 15 to 18 as Tiny Toast's core market.
Young people are still big cereal eaters, but the cereal business has been listing for several years. Sales fell 9 percent from 2011 through 2015, according to market researcher Nielsen. Sales have perked up a bit this year.
Cereal is being buffeted by growing competition at breakfast from other foods, from Greek yogurt to such revived standards as bacon and eggs. At the same time, cereal innovation has been spotty.
The cereal business is dominated by General Mills and Kellogg, which each have a 30 percent market share. The companies often launch new cereal products, but they are usually extensions of existing brands.
Cereal makers "need to take more risks and come out with new brands," said Rick Shea, a former cereal industry executive now with Shea Food Consultants in Chanhassen. Still, there's a good reason cereal makers are wary, Shea added.
"When you launch a totally new brand, you really have to create the brand, and that means higher levels of advertising spending."
General Mills didn't disclose Tiny Toast's ad budget. The company plans some short TV spots this summer but is focusing on such digital venues as Spotify, Snapchat and Instagram, Cunningham said. The medium of the target audience isn't really straight-up TV anyway, he said.
"The overwhelming majority of content is on mobile devices."