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Euromonitor International takes a look at several prominent trends in the global market for breakfast foods, each of which is driven by health and wellness.
The UK is the world’s second largest breakfast cereals market after the US, delivering 2% value growth in 2011, which can be considered appropriate for such a mature category. Predictably, Kellogg Co led breakfast cereals with a 32% value share in 2010, followed by Weetabix Ltd and Cereal Partners UK Ltd with value shares of 13% and 12%, respectively. Of late, however, the UK’s breakfast foods market is seeing increased activity from players for whom breakfast fare has previously been more of a sideline.
In 2009, Kraft launched its distinctly health and wellness-positioned Belvita Breakfast Biscuits, made with whole grains and fortified with vitamins and minerals, a step which helped Kraft boost its value share of the UK biscuits category from 2% in 2009 to 7% in 2010. These products are clearly successful and Kraft has been expanding the line, adding Belvita Breakfast Yogurt Crunch at the end of 2011. The product features a yoghurt filling made from probiotic yoghurt.
Danone, which at the beginning of 2011 introduced Activia Pouring Yogurt in the UK to take advantage of the increasingly popular consumer practice of mixing cereal with yoghurt instead of milk, went one step further in July 2012 by launching Activia Breakfast Pots. This product consists of probiotic yoghurt with a separate topping of granola clusters and comes in three flavour variants – Vanilla, Peach and Hint of Honey.
Another new entrant to the UK breakfast cereal market is organic baby and children’s food maker Ella’s Kitchen. In June 2012, the company introduced Wakey Wakey Baby Porridge, in plain, mango and apple and strawberry and mango and banana flavours. The first two varieties are suitable for infants from four months onwards, and the latter from seven months. The products come in an innovative pouch format referred to by the company as “spouches” because they feature a spout opening ideal for squeezing out the contents. The organic baby food market has largely defied the recession as parents are strongly inclined towards prioritising the health of their young children. Even during financially difficult times, this consumer group is highly resistant to taking risks in this area and will economise on their grocery spending in other categories.
Ireland sports the highest per capita consumption of breakfast cereals in the world, registering 8.1kg in 2011 compared to 4.4kg in the US and a global average of 0.6kg. Being a highly saturated market, the category experienced a fairly static CAGR of 1% over the 2006-2011 review period.
As mirrored in other industrialised countries where breakfast cereals count as staple food items, Irish consumers have become increasingly concerned about the levels of salt and sugar found in these products. This has pushed up demand for healthier breakfast options, and hot cereals have benefited the most.
The category achieved quite extraordinary value gains of 81% over the review period, managing to maintain its double-digit growth in 2011 against a backdrop of overall breakfast cereal stagnation in Ireland. Hot cereals not only offer the best value in terms of price per portion (an increasingly important factor in these economically challenging times), but they are also regarded as one of the healthiest breakfast options available, favoured, for example, by consumers attempting to lose weight. Partly for this reason, individual portion-sized packs suitable for microwaving have proven hugely popular with Irish consumers. Hot cereals are predicted a dynamic CAGR of 8% over the 2011-2016 forecast period in Ireland, while RTE cereals are anticipated a CAGR decline of 1%. Flakes (family breakfast cereals) are likely to suffer most.
Consumption of breakfast cereals in Spain is still relatively low at 1.8kg per capita in 2011, which amounts to just half the Western European average. The main reason for this is cultural. Dinner tends to be eaten very late in Spain, typically around 22.00hrs, which leaves consumers still feeling full first thing in the morning when they get up for work. If an early breakfast is consumed at all, it tends to consist of a cup of coffee accompanied by a biscuit before leaving the house. For this reason, breakfast biscuits and breakfast bars had been gaining popularity, but the meteoric rise of these products was reined in by the severe recession gripping the country in 2008, and which is refusing to let go. Prior to the recession in 2007, breakfast bars gained a whopping 17% on the previous year, but in 2011 this had dropped to just under 4%. However, considering the economic environment, this can still be regarded as fairly dynamic.
Breakfast bars accounted for 69% of snack bar sales in 2011, attesting to the popularity of these products. Retailers, and in particular Hacendado, have taken advantage of the situation by launching a significant number of private label products donning the same health claims/positionings as branded products. Private label’s share of breakfast bars shot up from 27% in 2006 to 37% in 2011.
The economic crisis, which is not expected to improve in the short to medium term, presents both an opportunity and a challenge for makers of breakfast products. On the one hand, more Spaniards will be having breakfast at home in order to economise but they will also be scouring the supermarket shelves for products with the lowest price points. Health and wellness awareness is high in the country, and the winners will be those players which can offer products which are both highly nutritious and economy-priced.
In retail volume terms, India emerged as the leading global growth market for breakfast cereals over the review period. Breakfast cereals are gaining popularity as an alternative breakfast option to traditional staples such as rice and bread. This trend is particularly strong in urban areas, where consumers have higher spending power and the price of processed cereals presents less of a hurdle. The health and wellness trend, combined with the growing number of double-income middle-class households, is fuelling this development.
RTE cereals fortified with vitamins and minerals and positioned at children are proving increasingly successful. In addition, as India has one of the highest rates of coronary heart disease in the world, with this incidence steadily rising, caring for the heart is becoming an ever more pressing consumer concern. To address this, PepsiCo launched a 30-day Smart Heart Challenge in September 2011 to promote its health and wellness-positioned Quaker Oats brand.
The Quaker Smart Heart Challenge was rolled out in corporate settings across various Indian cities. The initiative aimed to raise awareness among employees with a high risk of heart disease by means of free cholesterol checks, followed by the recommendation that they undertake ‘the challenge’, consisting of the consumption of two bowls of Quaker Oats in addition to 30 minutes of physical exercise and enjoying some fun-filled, stress-free time every day.
In July 2012, a study assessing the impact of micronutrient fortified milk and cereal-based foods on young children’s health was commissioned by Nestlé and the Nestlé Nutrition Institute and published in the journal BMC Public Health. The study took the form of a systematic review, involving 18 published trials and more than 5,400 children aged between six months and three years. The trials had been carried out in Africa, Asia, Latin America and Europe.
The researchers concluded that milk and cereal products fortified with a range of micronutrients (such as iron, zinc, vitamin A) were more useful in the prevention of iron-deficiency anaemia in young children than non-fortified foods or foods enriched with iron alone.
The fortification of children’s breakfast cereals is standard industry practice among major players in developed markets, and this study affirms its value. In developing countries, where malnutrition and deficiency diseases among children are rife, the public health impact of regular fortified cereal consumption could potentially be very positive.
Euromonitor International packaged food data show that volume sales of children’s breakfast cereals in developing and emerging economies are on the rise. They doubled, for instance, in Vietnam and Indonesia over the 2006-2011 review period.
In Vietnam, consumers are gradually becoming more familiar with breakfast cereal products. To this end, manufacturers have upped their promotional activities, which include the installation of temporary taste testing booths in supermarkets so consumers can actually try the products. Children’s breakfast cereals saw the fastest value growth in 2011 despite their comparatively high price points because parents believe that these products aid their children’s physical and mental development.
In Indonesia, children’s breakfast cereals recorded buoyant 18% value growth in 2011. Over the review period the appeal of breakfast cereals broadened to encompass busy families whose households do not include domestic servants. Breakfast cereals’ strong convenience factor is a key advantage in these settings, especially if parents are actively assured that their children are getting all the nutrients they need.
In the Philippines, children’s breakfast cereals enjoyed 4% volume and 7% value sales growth in 2011, ahead of other types of breakfast cereals. The introduction of smaller pack sizes ranging from 16-25g allowed mid- to low-income consumers to purchase breakfast cereals for their children more often. Small, affordable pack sizes have proven a key strategy for selling processed food products in developing markets.