Dive Brief:
- Post Holdings plans to close cereal manufacturing facilities in Cobourg, Ontario, and Sparks, Nevada, as the breakfast staple continues to struggle.
- The facilities, which collectively employ approximately 300 workers, are expected to close by the end of December.
- The broader cereal segment has struggled as consumers turn to low-carb diets, cut sugar or shift to more convenient and portable foods, such as protein bars and yogurt. IBISWorld estimated cereal revenue will decline 1.7% to $11.8 billion in 2025.
Dive Insight:
During its earnings call in February, Post said changing consumer preferences and niche brands with better-for-you ingredients have chipped away at the market share of the cereal giants. Cereal volumes during Post’s recent quarter declined 2.3%. The St. Louis company behind Honey Bunches of Oats and Fruity Pebbles is now taking steps to bring its production in line with consumer demand.
“The ready-to-eat cereal category continues to decline,” Nicolas Catoggio, CEO of Post Consumer Brands, said in a statement. “To respond to this, we are reducing excess manufacturing capacity and optimizing our North American plant network to better utilize our production capacity.”
Post expects to transfer production to other Post Consumer Brands facilities and face pretax charges of $63.5 million to $67.5 million due to the closures and job cuts.
Post said the Ontario facility has been run by the company since July 2017, when it acquired Weetabix.
The Nevada location has been part of the business since June 2021, when Post purchased the Treehouse Foods ready-to-eat cereal business. A year after the acquisition, Post announced it would spend up to $110 million to expand cereal production capacity at the Nevada facility, but it never moved forward with the project.
