Breakfast cereals suffer under trend toward convenience

by Pinar Hosafci, Euromonitor International
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Convenience breakfast is the new big thing. Following Mondelez International’s debut of its Belvita breakfast biscuits in 2010, the breakfast market is now brimming with products ranging from yogurt pots to breakfast drinks, and this does not bode well for the breakfast cereals category. Per capita consumption of breakfast cereals is plateauing globally and declining in most of the largest markets in North America and Western Europe. So, could this recent interest in more convenient breakfast options spell the end for the category as we know it?

 

Convenience breakfast on the rise in the West

Convenience breakfast is proving to be a very fertile market. Initially starting with breakfast biscuits, convenience options now include breakfast pots, yogurt pouches and breakfast drinks, and these products are resonating well with consumers. In the UK, sales of Belvita biscuits have grown more than tenfold in the four years since the product’s launch, Danone’s Activia breakfast pots are driving the spoonable yogurt category in France and the UK and breakfast drinks are seeing high double-digit growth in Australia. Cereal producers are not immune to this and have started to fight back. In 2013, Quaker Oats, the Kellogg Company and Weetabix Food Co. all launched their own convenience breakfast offerings. The Kellogg Company, Battle Creek, Michigan, US, has even gone one step further and partnered up with the dairy player Danone, Paris, to combine two on-trend breakfast options in its YoCrunch Cereal Bowl, which includes a serving of Greek yogurt with an RTE cereal topper. Cereal brands are also transferring the convenience hype to their traditional area of expertise. The breakfast cereals category is increasingly shifting to smaller pack formats. The share of thin wall plastic containers, the typical pack type for cereal/porridge pots within overall breakfast cereals, is rising rapidly in Australia, the US and the UK, and the trend is expected to continue over the next five years.

 

Although at first sight the trend appears to be a global one, it is primarily limited to the Western hemisphere. Convenience options are absent from the majority of the fastest growing regions in the world and are also rare in many Western European markets, excluding the UK. Even within the Western world, the trend is quite niche and primarily limited to the main urban areas where people are pressed for time, household size is small and the share of female workers is high.

Here to stay? Cost concerns and sugar worries

Breakfast pots and biscuits offer quick solutions which cater for today’s busy consumers. However, this comes at a price. McVitie's Breakfast Porridge Oats retails for £8.37 (US$14.35) per kg in comparison to its non-breakfast variant McVitie’s Digestive at £2.18 (US$3.74) per kg, and is more than 10 times as expensive as Tesco’s Everyday Value Digestive, which retails at £0.78 (US$1.34) per kg. Similarly, a bowl of cereal at home costs around £0.15 (26¢) while a porridge/muesli pot goes for £1 (US$1.71) per kg, a price that not many are willing or ready to pay.

Convenience options are also not necessarily the healthiest. Belvita Fruit & Fiber breakfast biscuits contain 16 g fat and 23 g sugar per 100 g, triple that of standard muesli with 5.1 g fat and 7.8 g sugar. The World Health Organization published a report earlier this year stating that sugar is the biggest threat to obesity. As people become more concerned about their health, they are likely to switch away from these products and consider healthier, less sugar-heavy options. In order to overcome this, cereal manufacturers might consider reducing the sugar content of their products and including naturally occurring sugars from fruit as opposed to refined sugar.

Convenience breakfast is likely to remain popular over the next few years, particularly in large cities where the number of single-person households is on the rise, consumers are increasingly time-strapped and the housewife concept starts to fade. However, the Western world is unlikely to embrace convenience products across the board due to their high prices and high sugar and fat content. By investing in convenience variants, cereal manufacturers could undoubtedly increase their short-term margins in mature markets like the UK and the US. However, investing in cost-effective muesli packs might be a better strategy over the long term. Muesli is perceived to be more wholesome, nutritious and natural, and can be combined with fruits, nuts and honey to offer a more balanced and tailored breakfast option for today’s health-conscious ‘modisumers’.

For further insight, please contact Pinar Hosafci, Food Analyst at Euromonitor International, at pinar.hosafci@euromonitor.com.

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