Post Holdings, a major player in the cereal industry, has announced plans to close two cereal manufacturing facilities in Cobourg, Ontario, and Sparks, Nevada. These closures come as the breakfast staple continues to struggle in the market. The facilities, which collectively employ around 300 workers, are expected to shut down by the end of December.
The broader cereal segment has faced challenges as consumer preferences shift towards low-carb diets, reduced sugar intake, and a preference for more convenient and portable food options like protein bars and yogurt. Market research from IBISWorld estimates that cereal revenue will decline by 1.7% to $11.8 billion by 2025.
During its earnings call in February, Post highlighted changing consumer preferences and the rise of niche brands offering better-for-you ingredients as factors impacting the market share of cereal giants. Cereal volumes for Post’s recent quarter saw a decline of 2.3%, prompting the company to align its production with consumer demand.
Nicolas Catoggio, CEO of Post Consumer Brands, stated, “The ready-to-eat cereal category continues to decline. To respond to this, we are reducing excess manufacturing capacity and optimizing our North American plant network to better utilize our production capacity.”
Post plans to transfer production to other Post Consumer Brands facilities and anticipates pretax charges of $63.5 million to $67.5 million due to the closures and job cuts. The Ontario facility has been under the company’s management since July 2017 when it acquired Weetabix, while the Nevada location became part of the business in June 2021 through the acquisition of Treehouse Foods’ ready-to-eat cereal business.
Despite initial plans to expand cereal production capacity at the Nevada facility with an investment of up to $110 million, Post decided not to move forward with the project. The company is now focused on streamlining its operations to adapt to the evolving demands of the market and consumer preferences.
