Although the overall breakfast cereal category is almost static at about pound;1.4bn, within it significant changes are taking place with the health issue and convenience being the key drivers. Ready to eat cereals take a large majority with around 78% of the market, followed by cereal bars at about 13% and hots at 9%.
Recent trends have seen a move away from products such as Corn Flakes and kids cereals and a move towards healthier products with all the major manufacturers highlighting the wholegrain benefits of their products.
The undisputed leader is Weetabix, with just under 8% of the ready to eat cereals market according to recent ACNielsen figures, compared with second placed Kellogg’s Cornflakes with 5.9%.
After its ‘What are you made of?’ campaign last year, emphasising its wholegrain content, Weetabix is currently being backed with a pound;5.5m Weetabix Week TV advertising campaign showcasing a portfolio of new topping ideas for Weetabix.
Ken Wood, CEO of The Weetabix Food Company, comments: “As consumer demand for healthy breakfast products increases, Weetabix is building on its current health credentials to create further appeal within the market. By launching the Weetabix Week campaign we’re showing consumers that Weetabix can be enjoyed in many different ways and can provide a delicious and healthy start to the day for all consumers. We’ve always known that Weetabix consumers love our product, now we’re just helping them to enjoy it differently and more often.”
Cereal Partners UK (CPUK), the partnership between Nestlé and General Mills, is another major player in the market. It benefits from the coverage of the Nestlé field sales force visiting a large number of wholesalers to manage the business.
Graeme Foster, business controller, convenience and independent channels, says the wholesale channel is an important route to market for CPUK and in recognition of the sector’s preference for smaller wholesale cases, it has provided smaller cases on its five main brands: Shredded Wheat, Shreddies, Cheerios, Shredded Wheat Bitesize and Fitnesse. In addition it provides a range of promotions tailored to the sector’s needs with price-marked packs, short-count case promotions offering one pack free per case. It has also provided promotions for specific accounts with pallet wraps and stack cards.
One of the areas to benefit most from the focus on health is hot cereals, due to the health benefits of oats. The hot instant cereals market is growing at 8.9% year on year and is currently worth pound;52m; porridge is growing at 18% and currently stands at pound;47m.
PepsiCo trade marketing manager Cara Beeby says hots is the fastest growing segment within the cereals category and PepsiCo’s Quaker accounts for 53% of the total market. Now PepsiCo is looking to build on the success of Quaker with a new oat-based ready to eat cereal range
The new range includes: Oat Granola, clusters of crunchy oat muesli with juicy raisins; Oat Crunch, crunchy bites of oat cereal; Oat Crisp, light, crispy pillows of oat cereal; and Oat Hoops, small hoops of crunchy oat cereal.
Beeby says oat cereals are already very popular in the US, where three of the top ready to eat brands are oat-based, and the UK market looks set to follow suit. In recent consumer tests, Quaker’s ready to eat oat cereals scored very highly with three quarters of consumers confirming that they would probably or definitely buy a Quaker cereal.
The ready to eat launch will be supported by a pound;4m media campaign which is part of an pound;11.4m marketing spend for Quaker over the next 12 months and will include television and press advertising featuring brand ambassador and TV character Windy Miller, as well as sampling and in-store promotional materials.
One of the smaller players in the market which is looking to get greater representation in the wholesale sector is Jordons. Jonathan Tew, wholesale controller at Jordans, comments: “Wholesale is a very important arena for Jordans’ future growth plans. Historically wholesalers concentrated on the big two or three brands – Kellogg’s, Weetabix and Cereal Partners – but with the main larger traditional categories in ready to eat cereals either static or in decline in volume and sales, some wholesalers are looking at what areas are in growth within the categories and the changes in consumer trends toward wholegrain cereals which is where Jordans sits and has always been.”
The company recently ran its first Booker Premier club promotion on Country Crisp and Tew says it went exceptionally well. He adds: “We will be following up with more heavyweight promotional activity, plus our Jordans TV advertising will be running throughout the summer. Added to that we will be launching a new product specifically for this channel shortly.”
Kelloggs is another strong supporter of the wholesale sector, and its work was recently recognised when it was crowned ambient supplier of the year at P H McLane’s recent Gala Dinner Awards. In the four weeks to March 25, the company had six of the top 10 sellers according to ACNielsen, and it is also a major player in the foodservice sector.
Jim McNeill, UK sales director for Kellogg’s, comments: “Wholesalers are massively important for the foodservice channel and are the wheels for our business to get the product to market.”
The Kellogg’s Portion-Pak range boasts 14 leading brands in a display-ready, single-serve pack, and has recently seen Kellogg’s Special K Red Berries, Kellogg’s Crunchy Nut Clusters Honey Nut, and Kellogg’s Just Right Portion-Paks added to its offering. Kellogg’s Special K is the fastest growing product in the Portion-Pak market and Kellogg’s Crunchy Nut is the third fastest growing.
Kellogg’s has a specific foodservice division, Kellogg’s Foodservice Solutions, which has created sales guides for specific sectors to maximise any Kellogg’s offerings to consumers. These include a guide for hotels, business and industry, travel and leisure, health and welfare and total foodservice.
It has also run promotions specifically for its foodservice customers, such as a recent one to win one of three Mini Convertibles, as well as smaller promotions offering customers the chance to win a Kellogg’s Sportswatch to help them keep an eye on their fitness this summer. The next promotion to run across the foodservice wholesale channel, timed to coincide with the World Cup, gives Kellogg’s trade customers the chance to claim three footbowls (bowls shaped like half a football), with any four cases of Kellogg’s cereal bars or Portion Paks.
Cereal bars are showing good growth with total volume up 3.4% in the year ending October 29, 2005, and value growth up 10% in the same period, to give an overall market value of pound;230m.
Nicky Carlyle, marketing controller for cereal bars at Jordans, says that while many cereal bars are consumed for breakfast they have extended to other occasions during the day. “The appeal of cereal bars is wide-ranging, with consumer motivations including breakfast alternatives and a healthy snack between meals. Most cereal bar eating occasions are early and mid-morning and mid-afternoon as breakfast replacements or between meal snacks.
“The major driver behind growth in the cereal bar market is an increased awareness of healthy eating and consumers seeking a healthier alternative to conventional snacks such as chocolate bars. Lifestyle changes are also leading to an increase in snacking, which is also driving growth.”
Frusli is Jordans’ best selling cereal bar. In 2004 Jordans launched Luxury Bars which are premium, indulgent cereal bars with fruit and nut levels ranging from 59% to 63%. Carlyle says: “As in many food sectors consumers are now seeking a balance of health and indulgence, and Jordans Luxury Bars offer consumers a great tasting, healthier snack alternative.” Jordans has also relaunched its Special Muesli Bar, adding Special Fruit Muesli bar to the range. Its newest launch is its Nut Seed bar, and its cereal bar range will be supported by a total marketing spend of pound;2m during 2006.
Another launch into the cereal bar market has come from The Weetabix Food Company, which is extending its Alpen portfolio with the introduction of a new range of prebiotic Alpen Light cereal bars.
It says the launch of Alpen Light cereal bars has been driven by consumer demand for a more healthy cereal bar. The Alpen Light cereal bars are low in saturated fat, high in fibre and with less than 70 calories they are intended to appeal to young adults, with a female bias, who are constantly on the go.
Alpen Light cereal bars are available in three flavour variants – Citrus Fruits, Summer Fruits and Apple and Sultana and contain added prebiotics – which can boost friendly bacteria to help maintain a healthy digestive system.
Ken Wood, CEO of The Weetabix Food Company, comments; “The launch of this new product is just the latest step in The Weetabix Food Company’s move to ensure we are able to provide healthier and delicious products, underpinned by wholegrain goodness and prebiotics for all UK cereal bar consumers.”
Breakfast on the go
The growing number of people consuming breakfast on the go is not only leading to growth in the cereal bar market, but in other solutions too. Eatwell UK has launched two new microwaveable products, Bacon Bap and Sausage Bacon Bap. Both come with a sachet of sauce and have an extended shelf life. They are bought chilled and are ready to eat after as little as 50 seconds heating in a microwave.
Steve Walker, national account controller (convenience) comments: “The total market for fresh microwaveable snacks has almost doubled over the last two years from pound;18.8m to pound;37.3m a year. Busy consumers are increasingly seeking out quality food-to-go products to meet the needs of their hectic lifestyles.”
Walker continues: “The morning rush is for most people the busiest time of the day. Whether hurrying to work or school, more and more people are grabbing breakfast on the run. For retailers, this opens up huge potential to grow sales from their food-to-go offering. We believe that the launch of our two new Feasters breakfast products offers the retailer the opportunity to maximise breakfast-time sales by widening the choice they can offer to their customers.”
Another innovation has been introduced by RHM Frozen which has launched a new frozen sector with McDougalls bake-from-frozen morning goods. The range includes Pains au Chocolat, Croissants, Pecan Danish, Cinnamon Danish and Custard Danish, all sold in packs of four, five or six.
Alison Wright, RHM Frozen’s head of marketing, says: “With over 100 years of home baking heritage, and brand leadership in the frozen pie market, McDougalls is perfectly positioned to pioneer bake-from-frozen morning goods. “Consumer interest in fresh morning goods has been heightened by the growth in coffee shops and in-store bakeries – driven by the appeal and aroma of fresh baking. However, many such products have a short shelf life, or are eaten cold. The McDougall’s bakery range offers consumers the same appeal and aroma, but baked at home the range can be enjoyed warm out of the oven – and eaten fresh. Home baking straight from the freezer is quick and effortless.”
=== Buyer’s viewpoint ===
For the first quarter of 2006 the Today’s Group is performing in single digit growth which is just ahead of the market.
The main trend in the market is towards healthier products with all major manufacturers launching or relaunching healthier eating cereals, which is helping to improve the category’s image.
They are continuing to support the healthier brands, for example Special K, Crunchy Nut and Weetabix, and therefore we are seeing good growth on these lines. Also we are seeing good growth on microwaveable sachets of hots (Oatso Simple) off a small base.
Both Kellogg’s and Weetabix continued to support the independent sector with their price-mark strategies to enable retailers to compete with the multiples. Also Kellogg’s continue to support VIT/PCC with two fors which is in line with the multiples’ promotional features.