Breakfast Battle: The Cereal Industry vs MAHA

0:00Hey, everyone. It's Jess. I'm here to say that my colleague Allison Poehley is guest hosting today's episode. Enjoy.

0:11Like many of us, my colleague Jesse Newman grew up eating cereal. But it wasn't the fun kind. It was mostly all the sort of like dry, boring, cardboard stuff. At a certain point, grape nuts entered our lives. Compliments of my mother. And, you know, what a way to just ruin a kid's breakfast. What was the cereal you wanted to eat? When we got a treat, some sort of treat, if we had a choice, it was always Froot Loops. But these days, like a lot of Americans, grown-up Jesse usually has yogurt or eggs and toast for breakfast. And that shift in breakfast habits across America has been bad news for cereal companies, and one company in particular.

1:00Kellogg is, you know, an American icon. Kellogg, one of America's oldest cereal companies, has struggled in recent years. They're just like the behemoth in the cereal aisle. Like they, they're the OG of cereal. I mean, they, you know, they invented cornflakes. Nothing gets you crowing in the morning like the crisp corn taste of Kellogg's cornflakes. They've been around for over 100 years. They make Froot Loops and Frosted Flakes and just so many of those cereals that a lot of kids love. Frosted Flakes, good. And now they're facing a new problem. Robert F. Kennedy Jr., the Secretary of Health and Human Services.

1:44He said, look, I'm going to tell the cereal companies to take artificial dyes out of their cereals. And he particularly talked about Fruit Loops. A box of Fruit Loops from Canada or from Europe. And it has a completely different group of ingredients actually colored with vegetable oils, which are safe. Ours are colored with chemical oils, which are very, very dangerous. And so this became one of his central talking points for the, you know, what would become Maha, the Maha movement. And now other big food companies are watching Kellogg closely as the company tries to navigate the powerful Make America Healthy Again movement.

2:28— They're just in the spotlight now and being targeted as a source of what's making Americans so sick. So it's just an incredibly fraught time for them, with pressure coming from all different corners. Welcome to The Journal, our show about money, business, and power. I'm Alison Poley. It's Thursday, August 28th.

3:00Coming up on the show, Kellogg's journey from American icon to Maha Target. it.

3:20When Kellogg started in 1906, it wasn't named Kellogg. It was named the Battle Creek Toasted Corn Flake Company. That's because Kellogg was founded in Battle Creek, Michigan, which is also known as Cereal City. Love it. I had some family that's from Battle Creek who I talked to as I was writing this story. And one thing that is for sure is that when Kellogg's Factory is producing, you know, there is this scent of toasted grain that sort of wafts around on the wind in Battle Creek. It's definitely Cereal City, yes. In the decades that followed, Kellogg's factories made Rice Krispies, Raisin Bran, Corn Pops, Frosted Flakes, Fruit Loops, and some of these cereals even had mascots attached to them, like Toucan Sam.

4:09We like them, Toucan Sam! Me too! So Toucan Sam and Tony the Tiger that certain generations of American kids grew up with as Saturday morning cartoons. So the mascots of these brands were just a part of people's lives. Oh, hi. I'm Tony the Bagger. Got my one-man band here to help tell you about these great Kellogg's sugar-frosted flakes. The marketing worked. Kellogg's cereals infiltrated seemingly every American household. For decades, cereal was convenient, cheap, and available everywhere. It was also seen as nutritious at a time when the U.S. government's food pyramid suggested six to 11 servings of carbohydrates a day.

4:52But then... More recently, I would say, over the past decade or so, it's been pretty well accepted that cereal is just in, like, long-term decline. And cereal consumption has really fallen off. A lot of families now perceive cereal as there's a lot of cereal that is heavily sweetened, it's just full of sugar, and, you know, a lot of families are perceiving it more as sort of a treat. rather than a nutritious breakfast. So what kinds of foods are people turning to instead? There are breakfast burritos and eggs and yogurt. So it's just our palates have really diversified and are looking for different things when it comes to breakfast.

5:34And in fact, a lot of families are even seeking even more convenience. So, you know, a lot of people will just grab like a granola bar or a protein bar for breakfast now. Since 2017, the percentage of U.S. adults who eat heavily sweetened cold cereal went from 43 percent down to 31 percent, which hasn't been great for Kellogg. But for decades, the company had diversified out of the cereal aisle and had a whole other snack side of the business. And eventually, the snacks outperformed the cereal side. Over the years, it really expanded. And Kellogg, as a company, started selling all kinds of snacks.

6:19So they started selling Pringles. Pringles sour cream and onions. And Cheez-Its. We like eating Cheez-Its. Great cheese taste in every bite. And Pop-Tarts. Part of your complete breakfast, new Wildberry Pop-Tarts. You may want to buy... So it wasn't just a cereal company. And in fact, over time, the snacks business became the much more sort of exciting part of Kellogg's business. It was faster growing. Zero had this, was, you know, in decline, but snacks were all the rage. Like, everybody is just snacking all day long. Yep. And so in 2022, Kellogg announced that they were going to split. Kellogg eventually turned into two different companies, a cereal business called WK Kellogg and a snack company called Kelanova.

7:03Essentially, they were just both going to be able to operate independently and have the focus that they needed in order to, you know, keep snacks growing. and try to revive cereal sales. And folks in the market saw that as putting a for sale sign on what was renamed W.K. Kellogg, so the cereal business, which was W.K. Kellogg. W.K. Kellogg, the standalone cereal company, tried to change with the times. It released a high-protein vegan cereal called Eat Your Mouth Off in 2024. It also collaborated with a sports nutrition brand and launched a Froot Loop-flavored protein shake. But nothing really broke through.

7:48And that was all before the Maha movement. Health Secretary Robert F. Kennedy Jr. says he wants food makers to stop using synthetic dyes made from petroleum to color what we eat and drink. That's next.

8:16We're just steps away from Kellogg's front door. Thank you for everyone being here. That's food activist Vani Hari at a protest in front of Kellogg's headquarters last fall. On social media, she goes by the handle TheFoodBabe, and she's got 2.3 million followers on Instagram. I'm here for all Americans who don't know the truth about our food industry.

8:50Hari and hundreds of protesters marched on a street in Battle Creek toward the front door of Kellogg's headquarters. They asked to be let in and were denied entry. Let's go see! Let's go see! Kellogg's cereal had recently become a big target of the Maha movement. People like Hari and RFK Jr. are highly critical of food that is processed, sugary, and filled with artificial food dyes. And many of Kellogg's products check all those boxes. Here's another protester speaking out against artificial food dyes. There's no way that you can deny that it's doing something negative to your body. It doesn't belong there.

9:31It's not natural. It shouldn't be in our food. A Kellogg spokeswoman said that the company agrees with the Trump administration's focus on health and wellness and that it has changed its cereals over time to suit consumers' changing tastes, such as adding offerings with less sugar. She said many cereals contain just four ingredients plus vitamins and minerals, which the company has recently begun noting on some packaging.

10:02The Maha movement has exploded in the last few months. And now, with RFK Jr. in government, it has a lot of power. RFK Jr. believes that artificial dyes can cause, you know, all different kinds of problems for consumers. But in particular, he says that they cause ADHD and other problems in kids. And so, you know, he doesn't think that artificial dyes have any place in the American food supply. And he started going after Froot Loops in particular. So what was his goal with those comments? So he said very early on he was asked what he would do if he, you know, were part of the Trump administration.

10:39And he said, I will ask the cereal companies to take dyes out of their products. Food companies and industry groups have said artificial dyes are safe. Immediately after Trump's election and RFK Jr.'s nomination to lead the HHS, big food companies, including Kellogg, tried to push back. After Trump was re-elected, food industry lobbyists descended on Capitol Hill and started to—one of my favorite details that we learned from reporting was that they started out by targeting lawmakers that they referred to as Maha Curious. So this was lawmakers who they thought might be sympathetic to some of Maha's messages.

11:21And they went in and they were trying to defend the products that they make and talk about how the products that they make are safe and affordable. And in some cases, they were bringing toxicologists with them to explain what certain ingredients do to impress upon them how seriously they take safety. And so they really ramped up their lobbying game. But RFK Jr.'s ideas around food have already spread to state houses across the country, from democratically controlled states like Massachusetts to Republican ones like West Virginia and Utah. All have introduced bills that ban many artificial dyes used by big food.

11:59And this is a huge concern for food companies. So food companies are, you know, they have been very, you know, clear that they sort of cannot operate in a world in which, you know, there's what they refer to as like a patchwork of legislation which bans certain ingredients in certain states and other ingredients in other states and requires warning labels in, you know, Texas and a QR code on packaging in Louisiana. And what the food companies will tell you is that, you know, they can't make one product for West Virginia and another product for another state. An HHS spokesman said that Kennedy values ongoing engagement with the food industry and is encouraged by the steps many companies are taking to improve nutrition and public health.

12:41Under this pressure, Kellogg relented.

13:12Although Kellogg's made these commitments, it remains to be seen whether U.S. consumers will buy naturally dyed Fruit Loops. And switching away from artificial dyes will not be easy. So this is a huge effort for their supply chains. First of all, they have to, like, find, you know, natural dyes. They've got to source these natural dyes. Often, you know, natural dyes can be more expensive, particularly if they are in short supplies, than artificial dyes. So they have to source these new dyes. They are going to have to change their, you know, manufacturing and their equipment in their plants. They're going to have to retool their plants.

13:50They are going to have to change their processes. And they will likely have to tweak their recipes.

14:01So how are Kellogg's challenges impacting its bottom line? Kellogg, as we've talked about, like, has Maha challenges, and then they just have serial challenges. You know, the category is struggling, and they won't draw a line and say, you know, Maha has impacted sales in this way. But we can see that their sales have really slowed and have are declining quarter after quarter. Under all this pressure, Kellogg attracted a buyer. Ferrero, the Italian food company most famous for making Nutella, announced in July that they were going to buy the cereal company for$3.1 billion. dollars. Originally, Ferrero was going to offer more, but then it realized that Maha was a big concern.

14:54And what was fascinating to see was that over the course of several months, they wound up reducing their offer by about 75 million dollars. And they said that that was because, you know, both of Kellogg's financial performance and also because of what they refer to as significant political and regulatory headwinds. And so, you know, it was what we learned through reporting was that Maha was a real concern for Ferrero.

15:29Jesse's reporting shows that executives across big food companies are trying to determine the best way to deal with Maha. Do they fight or do they acquiesce? Their challenge? Balancing America's new hunger for healthier ingredients with the realities of what people will actually buy. Some companies have assembled special teams for this new political moment. They're tracking ingredients under scrutiny and assessing which ones they might have to remove or label. What message does Kellogg's Maha problem send to the rest of the food industry? You know, I think in a lot of ways, Kellogg's Maha problem really mirrors what the rest of the industry is going through.

16:18Kellogg is unique in the amount of pressure that it's faced because they were this early target. But really, the entire food industry faces the same Maha problem. And I think what is really interesting that we learned through the course of the deal, however, is that Maha, in that case, had actual financial ramifications. So, Laha is a genuine force, and we can debate the scientific bona fides of, you know, the various things that it wants to do, and we can debate how much of it will actually get done. But I don't think there's any debating that it's a, you know, it's a significant force at the moment that companies really have to reckon with.

17:15That's all for today, Thursday, August 28th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Owen Tucker-Smith.

17:30Thanks for listening. See you tomorrow.