Dive Brief:
- Post Holdings announced plans to close cereal manufacturing facilities in Cobourg, Ontario, and Sparks, Nevada, due to ongoing struggles in the breakfast staple market.
- The closures, expected by the end of December, will affect around 300 employees.
- The cereal industry has been facing challenges as consumers shift towards low-carb diets and more convenient food options like protein bars and yogurt. According to IBISWorld, cereal revenue is projected to decline by 1.7% to $11.8 billion by 2025.
Dive Insight:
Post highlighted changing consumer preferences and the rise of niche brands offering healthier alternatives during their earnings call in February. The company noted a 2.3% decline in cereal volumes during the recent quarter, prompting them to align production with evolving consumer demands.
“The ready-to-eat cereal category is facing continued decline,” stated Nicolas Catoggio, CEO of Post Consumer Brands. “To address this, we are streamlining manufacturing capacity and optimizing our plant network in North America.”
Post plans to shift production to other Post Consumer Brands facilities and anticipates pretax charges of $63.5 million to $67.5 million as a result of the closures and workforce reductions.
The Ontario facility, under Post’s ownership since July 2017 after acquiring Weetabix, and the Nevada location, acquired in June 2021 from Treehouse Foods, have both been impacted by the decision.
Post initially planned to invest up to $110 million in expanding cereal production capacity at the Nevada facility, but the project was ultimately shelved.