Cereal sales slump as only Tony is spared
Britain’s biggest cereal brands have fallen out of favour with shoppers, with eight of the top 10 products recording a year-on-year drop in value or volume sales - and often both.
The worst hit include Kellogg’s Rice Krispies, which dropped 11.8% by value and 15.3% by volume, and Special K Original, down 9.1% and 13.2%, respectively [SymphonyIRI 52w/e 16 July].
Industry observers said consumers were turning to other breakfast products including yoghurt, cereal bars and porridge oats. “Competition from modern breakfast alternatives has been especially marked among 16 to 24-year-olds 39% of whom have a yoghurt or yoghurt drink for breakfast, while a quarter have cereal bars,” said Mintel senior food & drink analyst Alex Beckett.
The hot cereals market has been boosted by a raft of new instant porridge pots this year. Mornflakes launched its first such line under the Oats2Go name, and PepsiCo extended the Quaker Oats So Simple brand with the introduction of two new ranges.
Lower-priced own-label cereals were also taking their toll, and own-label product development had risen from a 22.5% share of breakfast cereal NPD in 2009 to 29% in 2010 [Mintel].
The development of new brands had sometimes come at the expense of older ones, experts suggested.
“Kellogg’s has had a great time with Krave, which is all about taste and indulgence they talked to consumers that hadn’t been talked to before but it potentially made consumers question what Crunchy Nut stands for as that used to major on taste,” said Fran Davies, marketing manager of Kellogg’s rival Weetabix. “Established brands are going to have to step up to the plate in terms of NPD and move with the times.”
Kellogg’s communications manager Paul Wheeler admitted the first half of the year had been challenging. “Shoppers’ budgets are under pressure and our customers are fighting for footfall,” he said.
Value had also been hit by promotional activity, which rose across the cereal market, with Tesco running a three-for-two offer across all 330 SKUs in its cereal aisle from 21 June to 12 July this year. The number of featured space promotions in the cereal category also increased, from 1,576 in the first seven months of 2010 to 1,733 over the same period this year [Assosia January-July].
“As a category we’re at a historic high at the moment and may be at the stage where we’re eroding value from the market,” said one industry insider.
Although only four of the top 10 brands increased promotions since the start of the year versus 2010 with deals on Rice Krispies down from 90 to 70 as it switched to value-added on-pack offers seven of the 10 brands increased the depth of deals. From January to July this year, the average saving offered by Frosties the only brand to record a rise in value and volume increased from 30.3% in 2010 to 38.8%.
And the saving offered on Shreddies soared from 33.5% to 46.4% over the same period, but still could not prevent a drop in value and volume.
Focus On Breakfast (13 August 2011)
Will Post deliver after surprise push into UK cereals market? (analysis; 13 August 2011)