If you've had the dubious pleasure of visiting a theme park this summer - with or without screaming kids - you'll know how roller coasters work. Many tend to use the momentum of a downward plunge to power them half way up the next incline, at which point they start slowing down. What follows then could either be another plunge or possibly a gentle plateau. The UK cereal bar market is following a similar course.
According to the latest market report from RTS Resource, growth in breakfast cereals and cereal bars has resembled a plateau, rather than a steep incline over recent years. Other recent figures indicate that cereal bar sales in supermarkets are still in growth, up 4.35% from £303.8M to £317.1M [TNS 52 w/e July 12, 2009]. Volume sales tell a slightly different tale, climbing just 0.4% in the same period.
That chimes with RTS's claims that the opportunities are lessening in this rapidly maturing market, and that as the recession has bitten, branded manufacturers in particular have found the going tougher. While the organisation says cereal bar sales increased by an annual average of 15.6% between 2003 and 2008, it adds: "Sales in the UK really began to take off several years ago and now the sector is full of many different brands, flavours and formulations. Inevitably, growth has now slowed ... "
In addition, RTS says bars may increasingly be viewed as relatively expensive, especially to families clamping down on spending. "The prevailing economic downturn will force certain consumers to look for more economic solutions. Lower priced own brands will undoubtedly benefit from this, especially as average wages may fall behind inflation over the next few years."
At the same time, at the processor's end, raw materials are becoming more expensive. Praveen Vijh, co-founder of premium snacks manufacturer Eat Natural, says: "Prices of ingredients such as brazil nuts and pistachios have gone through the roof, so we're working with them much more closely to cut costs and ensure they don't go up much more."
Processors can also cut costs by employing functional ingredients, such as sucrose esters. While these have been around for some time, they are generating renewed interest at the moment. Russell Wheeler, technical sales manager at ingredients firm S Black, explains why: "As an emulsifier it stops product sticking to wrappers and conveyor belts, reducing product loss." It also avoids excessive use of fat, which was traditionally employed to minimise stickiness.
For example, Sisterna claims that when compared with a standard binder syrup, 0.5% of its Sucrosilk HP10 blend of sucrose esters in a product showed significantly reduced adhesion to stainless steel (17%). Tests showed that a higher dose reduced adhesion even further, by 28-33%.
Consequently, Sucrosilk slashes wastage costs while appealing to the health conscious. It also delays rancidity, extending shelf-life by encapsulating oils in a binder syrup, denying light and oxygen access to oils in a product and slowing oxidation.
Wheeler says processors are focusing more on saving cash through processing techniques and less on new product development (NPD) because of financial pressures: "We have a number of customers concentrating on value engineering. Normally we would be doing innovative presentations to NPD teams, but they are saying: 'Our purchasing managers have told us to focus on cost savings for existing products, rather than NPD.'"
And recent national press stories have confirmed that the price of sugar is rocketing, with knock-on effects on food prices expected.
The challenge, then, is to keep the momentum of cereal bar sales going and offer added value to shoppers while keeping prices low and preserving quality. Other trends that continue to offer opportunities, include an appetite for healthy, natural ingredients and traditional flavours.
The attraction of traditional foods in a recession has been well-documented, with the press reports recording the popularity of so-called 'heritage brands'. Shoppers, it seems, are finding that familiarity breeds solace, not contempt. It's a point that Vijh stresses: "The foodie-orientated trend towards obscure ingredients has come to an abrupt end. The only thing we have learned from the recession is to make sure you create products the consumer is familiar with. Our cherries, almonds and yogurt bar [launched in February] harks back to cherry Bakewells - a flavour people are used to."
Beyond that, there is a trade-off to consider between cost, health and taste, says Vijh. RTS puts it like this: "In the future, we may well wish to continue to purchase cereals and bars that promise better health or indulgence, but it could be that many are unable, or unwilling, to pay the prices demanded."
Vijh maintains the old adage that people are still prepared to pay for high quality ingredients, providing a rich, indulgent taste. "We've just launched a product with a very intense taste made with single estate dark chocolate from Santa Domingo, brazils and apricots." He says the aim is to turn the 60% of consumers who don't consume cereal bars on to them by using the kind of tastes that draw them to confectionery.
If indulgent taste can be maintained while appealing to the health-conscious consumer, so much the better, he says. The big question is which health trends are still pulling in the punters. Here, activity seems to be most intense in the areas of heart and gut health, through fibre, proteins, prebiotics, anti-oxidants and omega-3 oils, in addition to low calorie options.
Interest in the cardiovascular benefits of fibre in oats is still high, with Vijh saying: "We have started experimenting with a bar with gluten-free oats, marrying them with a dark Seville orange marmalade."
The Weetabix Food Company is pursuing the oats option, launching Weetabix Oaty bars in June, aimed at kids' lunch boxes. As the company says: "Many schools no longer allow chocolate bars, so cereal bars such as Oaty bars offer the perfect alternative as they reassure mums on health, taste great and are appealing to kids." Its Alpen Light bars contain high-fibre whole grain wheat flakes and oats.
Wheeler says: "We're very busy with fibres. We have a large portfolio with wheat, oat, citrus and apple fibres, so you can have a high-fibre claim on pack. It's mainly wheat and oat fibres that we're working with."
It's not just their health credentials that make fibres attractive for manufacturers. They offer functional benefits, ranging from enhancing texture and crispiness, controlling stickiness and moisture content, either enabling a product to retain moisture or helping it drain off during the cooking process. Fruit fibres are another low calorie alternative to sugar, says Wheeler. Malt extracts are also used by S Black to enhance taste, provide a sweet, cereal flavour for products while keeping calories low.
Alpen Light bars contain inulin and fructo-oligosaccharide (otherwise known as FOS or oligofructose), natural sugar replacements supplied by S Black and sourced from Sensus. Beneo-Orafti provides similar ingredients. According to a spokesman for the firm: "In 2008 the number of products launched to market that contained inulin or oligofructose increased by 225% in comparison to 2007."
Aside from driving calories down, these components are also soluble fibres and prebiotics extracted from chicory, helping manufacturers meet the demands of shoppers concerned about healthy eating, says Wheeler. "FOS enables the manufacturer to make a dietary fibre and prebiotic claim on pack. We have four powdered and three syrup versions - the chain length depends on how sweet the products are."
In this way, Alpen bars combine low calories with indulgence. "The standard bar range has been made even tastier with 30% more fruit recipes and indulgent drizzles," says a spokeswoman for the firm. "This has been a great way to offer consumers wholesome snacks proving they don't have to compromise on taste."
Another sugar replacement with health credentials offering low calorie benefits is Beneo-Palatinit's Isomol and Palatinose products. Isomol mainly acts to improve texture and prevent moisture absorption, keeping products crispy. While it has been on the market for more than 20 years, the firm is constantly working to refine it. Variants include Isomol GS, which has high solubility, reduces the risk of sugar recrystallisation and was specifically tailored to the cereal bar market in 2000. The latest introduction is Palatinose, which was launched four years ago. "Palatinose is going to be used in cereal bars more and more," says Ingrid Willibald-Ettle, head of customer technical service at Beneo-Palatinit. "It's a functional carbohydrate that's tooth-friendly with a low glycaemic index that's naturally derived from sugar beet and provides prolonged energy in the form of glucose."
The tremendous interest in fibre and low-calorie, functional sugars are not the only trends in the cereal bar market. Ingredients such as omega-3 and omega-6 fatty acids are demonstrating considerable staying power. Glanbia Nutritionals has seized on the trend with the launch of Ultragrad two years ago, the only free-flow powder that acts as a delivery vehicle for omega-3 and omega-6 oils. Not only does it contain both, but it is also a strong anti-oxidant, derived from flaxseed. "We have a variety of products with different levels of flax and oils," says Paul Kollesoff, business development manager at Glanbia Nutritionals. "There's huge demand for the product and we're seeing the early stages of product launches with interest throughout Europe. We can develop Ultragrad further and if the customer wants more DHA [long chain omega-3 fatty acid], we can tweak it."
In addition to Ultragrad's other benefits, the product contains 20% protein, scratching another itch that manufacturers have at the moment. Proteins, particularly those derived from soy and whey, are big business, as Volac bears witness. "With many schools banning nut products from lunch boxes due to allergy concerns, whey protein provides the opportunity to replace that lost protein," says a spokesman for the business. Volac's Volactive ProCrisp not only helps maintain muscle mass, but promotes satiety, balances blood sugar levels and creates a crispy texture without the need for unnecessary fat levels. "It can also provide aeration so a large-sized bar can be offered with the same calorific value as a smaller bar," says Volac. "Unlike traditional cereal, cereal bars are consumed without milk and therefore lack the complementary protein for a balanced meal. Fortifying the nutrition in cereal bars with protein from milk (such as Volactive UltraWhey whey protein isolate) provides a total meal replacement on the go."
S Black is also active in protein ingredients, drawing on Israeli source Solbar Industries, which offers soy products such as Solpro 940 specifically for the cereal bar market. The reason why soy has attracted so much attention is that it is claimed to offer a host of health benefits, ranging from combating type 2 diabetes to reducing blood pressure and preventing cancer. It is also said to boost heart health, gut health, brain health and the immune system and fight ageing.
Ingredients such as Solbar's portfolio of soy protein products as well as whey proteins, omega-3 oils, low-calorie sugar replacements and functional ingredients offer processors ways to tap into trends more cheaply. And of those trends, healthy eating, indulgent taste and low price predominate.
So long as cereal bar manufacturers pursue these objectives, they are on the right track. And while shoppers may restrict their spending in the immediate future, RTS predicts "signs of a significant 'pick up'" towards 2013. And while competition may increase, it says, one of the great strengths of the cereal bar versus the cereal is its convenience as a cereal replacement on-the-go.
Five best selling UK cereal bars by volume [TNS 52 w/e July 12 2009]
1 Harvest Chewee Cereal Bar
2 Kellogg's Nutri-Grain Cereal Bar
3 Kellogg's Rice Krispies Cereal Bar
4 Cadbury Brunch Bar
5 Kellogg's Special K Bar