Be honest. Did you tuck into a wholesome bowl of cereal after you got up this morning? If you work for a company that makes breakfast cereals, your answer could be particularly ironic.
The top manufacturers in the category know the phenomenon of skipping breakfast is something they must tackle. According to Kellogg, one in five adults and one in six kids miss out on the first meal of the day. The company launched its Wake Up to Breakfast marketing campaign in June to curb breakfast skiving, enlisting celebrity trio Jo Frost, Ian Wright and Phillippa Forrester to spread the message on packs. But marketing is only half the battle. The challenge also lies in creating cereals that tap into trends that will hook consumers.
There's a lot to play for. TNS Worldpanel data 52 w/e May 20 values the whole category at £1.6bn if you add up ready-to-eat cereals, hot cereals and cereal bars. Converting the lost adult consumers alone would take that figure to almost £2bn.
So where do the opportunities lie? Cereal Partners UK, which makes Nestlé branded cereals, says adult cereals are the core driver of growth in the ready-to-eat sector, which is worth £1.2bn and has grown in value by 8.9% ACNielsen 52 w/e June 16.
Within the sector, manufacturers agree that health concerns are increasingly dictating the type of cereal bought by consumers. "Health trends continue to drive growth in breakfast choice as consumers begin to take on board the importance of breakfast in maintaining a healthy balanced lifestyle," says Andrew Pyne, the company's corporate affairs manager.
Analysing the health trend
Kellogg UK marketing director Kevin Brennan pinpoints what he perceives to be core areas of focus within that arena. "There are two or three really big health agendas: weight and shape management; heart health and cholesterol control; and simple ways to eat better." The last agenda will be the major interest for Kellogg in the next year, he says. The launch of Special K Sustain earlier this year, promoted as a sensible component of a weight control programme, addressed the weight and shape management trend. In addition, heart health is being addressed by the continuing roll out of its Multi-grain range across its brands. One of the latest products to get the treatment is Kellogg's Multi-grain Cornflakes.
Meanwhile the company has separately brought out Kellogg's Cornflakes With a Hint of Honey. The product builds on an appetite for natural sweeteners to replace added sugar. Jordans too is exploring alternatives to sugar in future products. "We are looking at other sweetening materials such as fruit juice, but we haven't quite found what we're looking for yet," says sales director Mark Owen.
The quest for natural sweeteners also produced the launch in June of Honey Waffles by Honey Monster Foods, maker of the Honey Monster brand. "Honey waffles are sweetened with natural sugar, made from whole grain cereals, fortified with vitamins, minerals and a prebiotic and are high in fibre," says marketing manager Jane James.
There could be further mileage in teaming up with other natural product categories, says Owen. "We would like to look at dairy and cereal and the use of fresh fruit."
Opportunities in oats
For The Weetabix Food Company, the cold oat sector offers considerable potential. "One of the most evident recent trends that has accounted for substantial new product development from all manufacturers is the cold oat category," says marketing controller Tony Corp. "This appeals to consumers who appreciate the benefits of oats but do not necessarily want porridge. Having oats in an accessible and easy to eat format is a huge benefit and undoubtedly will lead to the development of many new oat-based cereal brands in the future."
This trend is leading to a lot of activity in the muesli sector, with oats, a well-known source of B vitamins, featuring more prominently, says Corp. It has also led to Weetabix's launch of Oatiflakes, following in the footsteps of Oatibix, both introduced in the past year. The Oatibix range was recently enhanced by the launch of Oatibix Bitesize Chocolate & Raisin, alongside existing bitesize lines under the Oatibix name.
The popularity of oats is causing some manufacturers to see renewed opportunities in hot cereals, the smallest sector at £108M, declining 2% in value TNS Worldpanel 52 w/e May 20. Jordans, for example, believes porridge has untapped potential. "We're looking at porridge in ready to eat and single serve formats," says Owen. "There's nothing satisfactory there at the moment." However, he says shortages and cost increases could create problems. "Oats are in great demand. Everybody will be competing for the same pool of raw materials because of their success."
Jordans has combined its vision for porridge with an increased appetite for healthy multi-grains with the launch of its Multigrain Porridge. It has also explored the goodness of other grains through the expansion of its Superfoods range to include Superfoods Granola and Superfoods Porridge variants.
Pressure from government and consumers generated by health and obesity issues is also driving manufacturers to cut the amount of salt, sugar and fat in their products. The challenge is to end up with products that still taste great, so shoppers will continue to buy them.
The need to achieve this balance has led to Spice Application Systems (SAS) launching its Cloud Cover unit. This uses electrostatic coating techniques to finely tune ingredients such as flavourings or ingredients in products. "Being able to adjust the amount of flavourings sprayed on to the product just before the packaging unit means the customer gets a much better result," says Peter King, md of SAS. "Whether you want to reduce your levels of salt from four percent to two percent or increase vitamin content on a new healthy range of cereals, there's no better way of doing this than using electrostatic coating techniques."
Some companies are pursuing the health benefits of superfruits or prebiotics in the adults and kids sectors. Weetabix has been busy revamping its Alpen range, launching Alpen High Fruit, crammed full of fruits including Chilean flame raisins and cranberries and Alpen Nut Crunch. Both contain oats as well as whole grain wheat flakes. For children, it has launched Weetabix Pirates, linked to the film Pirates of The Caribbean: At World's End, after introducing Star Force, based on Disney's Power Rangers characters, and Princess Stars in January. All these cereals parade their health credentials, being free from artificial colours, flavours and preservatives with an added prebiotic to promote a healthy gut.
Snacks and on-the-go
Of course, it's not just healthy eating that is influencing shoppers. Products pandering to the convenience trend, which can be eaten quickly, possibly while travelling, are also selling well. That's one reason why cereal bars is the fastest growing sector in the cereals category. It's up 13% in value to £277M TNS Worldpanel 52 w/e May 20, although the Home Grown Cereals Authority says growth has slowed a little this year.
Undaunted, Kellogg has targeted the on-the-go and snacking sector with the launch of a chocolate oat baked bar into its wider Nutrigrain stable and Special K Mini Breaks bitesized snacks, boasting just 99 calories per bag. Dorset Cereals has combined health and convenience with the launch of its Chunky Slices in bags of three, in Delicious Date & Pecan and Delicious Cranberry & Almond variants. The products hold roasted and malted spelt, oat flakes, fruit, nuts and seeds together with agave nectar.
Jordans, meanwhile, sees value in combining healthy multi-grains with its multi-pack muesli bars to produce single bars. "We are looking to upgrade flavours and we are looking at slightly different recipes for impulse and on-the-go products," says Owen.
It seems cereal firms are determined to make it harder for consumers to dodge breakfast by offering them increasingly tempting offerings that appeal to their desire to eat more healthily. Whether or not they succeed in converting the skivers remains to be seen. FM