As Lidl, Aldi and Asda axe their cereal characters in the name of health, does this mean the days of the cute mascot are numbered?

It’s getting perilous out there for Coco the Monkey and his gang. Because cereal mascots are fast on their way to becoming an endangered species. Following much debate about their ethics - campaigners have long complained the cuddly mascots are encouraging childhood obesity - the new year heralded the first cull.

At the start of January, Lidl took the plunge by pledging to axe the mascots on its own-label cereals. According to the discounter, the move would curb “pester power” from kids who were attracted to the designs of the sugary cereals. It proved a popular decision. Just days later, Asda and Aldi followed suit with culls of their own characters.

It all forms part of a move towards healthier, more conscious choices at the breakfast table. Sugary children’s fare is falling out of favour. See the performance of the cartoon-adorned Kellogg’s Coco Pops and Rice Krispies, down £2.7m (5.4%) and £1.9m (5.1%) respectively [Nielsen 52 w/e 7 September 2019]. Meanwhile, brands with values are booming. WK Kellogg, the vegan granola and organic wheats brand that donates 10% of profits to charity, is up £2.7m (73.8%). Environmental and agricultural charity supporter Jordans has grown £2.3m (13.3%). Vegan, gluten-free, small batch Deliciously Ella is up 63% or £1.1m.

These cereals are behind a slightly more buoyant cereals market this year, up 0.9% in value after years of steady decline [Kantar]. All of which suggests traditional cereals may have to rethink their strategy if they want to get in on the growth.

“Retailers play a crucial role in helping customers make more informed choices”

For now, Kellogg’s shows no sign of reneging on its tried-and-tested mascots Tony the Tiger, Coco the Monkey and Snap, Crackle & Pop. “Our characters have been around for over 50 years, long before the obesity problem in the UK,” says a spokesman. “We don’t believe removing characters is the solution to the problem. We’ll continue to take care and be responsible when advertising and marketing our products.”

This puts the company on a collision course with retailers and campaign groups. Asda nutritionist Beth Fowler says removing characters from its own-label cereals is part of its “long-term effort” to tackle obesity. “Retailers play a crucial role in helping customers make more informed choices in the supermarket,” she says. “We want to inspire customers to make healthier everyday choices.”

Tam Fry, chairman of the National Obesity Forum, believes it’s the right move. “It’s irresponsible of Kellogg’s to continue using these characters,” he says. “The association between cartoon characters and obesity is well known. Children are excited by these wonderful creatures so their removal will be a godsend to parents.”

 

Own label gains further ground: cereal value sales

Cereal value sales   
  Value sales (£m)  % growth Market share
Everyday Family 556.1 2.0 35.1
Family Flavoured 294.0 -1.3 18.5
Muesli & Granola 253.8 2.6 16.0
Porridge 226.3 2.6 14.3
Functional Health 203.4 -1.4 12.8
Portable 51.9 -4.5 3.3
       
Own label vs branded   
  Value sales (£m)  % growth  
Brands 1115.4 -0.3  
Own Label 470.1 3.7  
       
 Source: Kantar 52 w/e 6 October 2019      
  • The battle between brands and own label is intensifying. Branded prices are climbing as a result of cuts in promotional activity, while own label prices are falling. So retailers are prioritising their own products in a bid to stay competitive.
  • “Own label lines continue to make significant gains on branded cereals, accounting for 30% of market value and 45% of packs sold over the past year,” according to Kantar analyst Keith Gowan.
  • Asda’s own label lines have seen value growth of 7.7%, while Sainsbury’s are up 3.4%. This combined growth has helped temper the rising price of branded cereals.
  • Big gains for Aldi and Lidl have also helped boost own label share.
  • “The discounters are in growth and own label lines make up roughly 90% of their cereal repertoire,” adds Gowan. “That said, Lidl has significantly increased its branded cereal range, resulting in their sales of branded lines growing 28.6%.”
  • Sales on deal are down 2.1% overall. But 73% of branded cereal is still sold on promotion, compared with just 27% of own label.
 

Sugar reduction

At the same time, you could argue that Kellogg’s is doing something more important: addressing what’s inside its cereal boxes, rather than what’s on the outside. Coco Pops’ recipe contains half the sugar it did in 2017, says Kellogg’s. That means a bowl of Coco Pops is 17% sugar, while Asda’s own-label equivalent Choco Snaps weighs in at 32%. So getting rid of the cartoon monkey is just part of the battle (though Asda says it has reduced the sugar content of its own-brand cereals by 26% over the past five years).

Kellogg’s is looking critically at its other brands, too. In 2017, it famously axed Ricicles in a bid to cut sugar across its portfolio. It also unveiled a Reduced Sugar Frosties, which contains 30% less of the offending element than the standard cereal.

This is all against the backdrop of the government’s sugar reduction programme. In 2015, PHE called on cereal makers to reduce their sugar content by 20%. The target date is the end of this year, but that may prove a struggle. Last May, sugar reduction stood at just 8.5%, according to government figures.

“Children are excited by cartoons so their removal will be a godsend to parents”

Because some cereals remain very sugary indeed. Take the aforementioned Frosties. The full-sugar version packs a whopping 37g of sugar per 100g, significantly more than the own-label equivalents from Tesco (26g) and Asda (29g). Despite all the hype around sugar content, Frosties’ sales are booming.

And unlike Coco Pops, Kellogg’s is not planning to make any changes to the sugary formula. Because it is keen to stress that the brand’s growth is not coming from kids. “Frosties shoppers are buying more volume, more often and we are also recruiting new shoppers into the brand, in particular with adult shoppers under 28 years who are in the pre-family life stage,” explains marketing director Vicky Middlemast.

She touches on a key trend in cereals: the growing adult market for saccharine stuff. That’s illustrated by the strong performance of its adult-orientated, indulgent brands such as Crunchy Nut and Krave (see above), up £1.1m (4.2%) and £4.1m (2.9%) respectively.

Granted, volumes are down for the latter. But Kellogg’s is tackling that through higher-priced innovation, which seems to be proving a hit. “We’ve seen strong growth on the Granola range at 34.7% in value, driven by increased penetration as the brand continues to recruit younger, more ‘taste driven’ shoppers,” says Middlemast, quoting IRI figures for the year ending 19 November. “Crunchy Nut Clusters grew 10.3%, driven largely by new shoppers. Both the Granola and the Clusters ranges are very positive for category value growth as they drive trade up through higher pence per gram.”

That move towards pricier lines reflects what’s going on in the wider category. Standard cereals are struggling as retailers reduce space for larger, kilo and 750g packs of branded cereals and promote them less (Frosties is one exception, with Tesco only selling bumper 750g boxes). That’s resulting in big declines for the likes of Kellogg’s Corn Flakes, Coco Pops, Quaker Oats and Weetos. Instead, retailers are going big on the cheaper own-label versions of big brands.

The latter is helping own label gain even more ground in the cereal aisles. While brands are down 0.3% in value and 2.8% in volume, own label is up 3.7% in value and 5.1% in volume [Kantar]. Those figures are driven partly by massive gains for Aldi and Lidl, which have grown their cereal sales by 8.7% and 7% respectively. Asda is the only big four retailer to have grown category value. Even here, own label has driven the bulk of its growth.

So brands have had to take a different tack. They are the driving force behind the 0.6% rise in prices across the cereals category - a figure that rises to 2.5% among branded lines. That’s partly down to a decrease in promotional activity, says Kantar, as sales on deal declined 2.1%. But it’s also down to the aforementioned pricier lines. Kantar analyst Keith Gowan says the new mueslis and granolas “sell at a price premium compared to the rest of the market - £2.02 per pack compared with the £1.71 average”.

To justify this premium, many brands are trading on a mix of natural, ethical, nutritional and environmental credentials. It seems to be a successful strategy. Indeed, WK Kellogg gained £2.7m, the largest of any brand to have achieved volume growth in the past year [Nielsen]. That’s despite being a decidedly pricey affair at an average of £5.56/kilo, more than £2 above the market average.

“We’re delighted with the progression we’ve seen on our newest brand since it launched in January 2018,” says Middlemast. “In 2019, we united all WK Kellogg’s granolas under the ‘no added sugar’ umbrella, containing naturally occurring sugars only - resulting in a considerable increase in rate of sale.” That success inspired the launch of the two-strong WK Kellogg Plant Protein Crunch last July, which has already delivered incremental sales, according to Middlemast.

It’s not the only one seeing success with a higher-priced offering. Deliciously Ella has managed 56.8% volume growth at an average price of £7.64 a kilo. And Lizi’s Granola has seen a 15.2% volume increase while selling for £7.37 a kilo.

“Consumers want to be wowed, surprised and supported in their healthier life choices”

For Lizi’s brand manager Alice Bream, the secret to success is meeting consumer expectations of a premium product. “They want to be wowed, surprised and, importantly, further supported in their healthier life choices,” she says. “We now need to go a step further than no added sugar offerings and show added value through true functional ingredients and tangible health benefits - it’s what consumers are looking for.”

Bream points to the 2019 launch of Lizi’s Digestive Health Granola, which she claims is the UK’s first granola to contain live ­bacteria to help boost gut health, as an example. Others clearly see this as a trend worth ­tapping. In October, Cereal Partners Worldwide launched GoodBelly, a duo of wholegrain flake products containing live probiotic cultures to benefit digestive health.

“Forty-four per cent of all breakfast occasions are chosen by consumers for health reasons,” says Cereal Partners Worldwide’s marketing director Toby Baker, citing a CPW Global Prospect Study. “However, it is important to note that health means different things to different people - ranging from digestive wellness to reduced sugar in the diet. When asked, consumers also cited wholegrain and high fibre as two of the most important considerations.”

Hence the launch of Lizi’s Super Muesli, a four-strong range of cereals promising specific functional benefits such as a boost to energy levels and even cognitive health and mental wellbeing.

“Super Muesli entwines functional benefits with the classic Lizi’s flavour and crunch as the brand broadens its appeal by targeting a younger audience,” says Bream. “The range is packed full of added vitamins and minerals, such as vitamin C, B6, B2 and zinc, as well as natural ingredients such as turmeric, barley, hemp, maca powder and quinoa to deliver specific health benefits. It’s these added benefits that will continue to lift the category.”

 

Room for health and indulgence: top 10 cereal brands by value

Top 10 cereal brands  
  Value (£m) % growth
Weetabix 144.5 2.9
Quaker 114.6 -2.3
Crunchy Nut 88.3 8.1
Cornflakes 49.2 -6
Coco Pops 47.6 -5.4
Special K 47 -2.1
Shreddies 44.3 2.1
Cheerios 42.7 4.1
Rice Krispies 35.9 -5.1
Shredded Wheat 30 0.7
     
Source: Nielsen 52 w/e 10 August 2019    
  • According to Nielsen’s read of the market, cereal value sales edged up 0.9% last year. It’s hardly proof of a category in rude health, especially when volumes are down 1.4%. But context is everything, because the last time Nielsen reported value growth for cereals over a similar period was in 2013.
  • The growth is down to a combination of factors. A cut in promotions has been key to the rise in value and the corresponding drop in volumes, while the rise of premium, health-led brands is also significant.
  • For proof, see the £2.7m (73.8%) gain of vegan, organic and no added sugar brand WK Kellogg. Other examples include the growth of challenger brands such as Deliciously Ella, Moma and Lizi’s Granola, which are up £1.1m (63%), £510k (17.6%) and £820k (12.2%) respectively.
  • Still, it’s not all about healthy fare. The greatest value gain of the year belongs to Crunchy Nut, which has netted an extra £6.6m after reporting strong growth for its premium granolas. Second is Weetabix, with growth of £4.1m. However, volumes are down for both brands, partly as a result of cuts to deal activity.
  • The former’s growth – along with that of Frosties, up 10.6% (£2.2m) on volumes up 8.6% – proves there is still a place at the breakfast table for sugary cereals. “Taste is still the number one driving factor behind shoppers’ purchases,” says Kellogg’s marketing lead Aimee Cowan.
 

Kids’ cereals

There’s evidence of these credentials gaining ground in children’s cereals too. No longer are innovations such as White Chocolate Coco Pops creating the levels of excitement they once did. Although Kantar names it the biggest launch in cereals in 2019, it was not enough to put the overall brand in growth. In fact, Coco Pops suffered the second-biggest loss of the year [Nielsen]. This suggests two things: that the new white Coco Pops ­cannibalised the main offering and that shoppers are leaving the traditional kids’ cereals category.

So Kellogg’s is trying a different tack with January’s launch of WK Kellogg by Kids. The multigrain stars, hoops and balls are high in fibre, contain no artificial colours, sweeteners or flavours and are mixed with a selection of fruit and - showing just how far the market has moved on since Coco the Monkey’s heyday - vegetables. They’re vegan and, crucially, contain no added sugar.

Nestlé believes this could be a profitable area. “We expect to see growth for cereals that target specific health and wellness needs for adults and kids alike,” says Cereal Partners Worldwide’s Baker. 

“We expect to see growth for cereals that target specific health and wellness needs”

There are no limits on just how far away these cereals can stray from standard children’s fare. See the Bambeanies brand (see right), a duo of low-sugar kids’ cereals featuring ingredients that would have horrified the Ricicles generation, such as chickpeas and baobab. 

Stewart McGuckin, head of retail at brand owner Rainforest Foods, says it was vital to take a different approach at a time when it is becoming “more difficult for families to find a product they can trust”.

“With increasing focus on the amount of sugar in many products, the type of ingredients used and where they’re from, we wanted to create foods that challenged the normal way of doing things,” he explains. “We took the super ingredients all around us in nature and brought them together in simple, tasty and exciting products - absolutely nothing artificial, no confusing labels which parents struggle to make head or tail of and that all the family would enjoy.”

Given Public Health England’s warning in September that 40% of primary school leavers could be overweight in 2024, challenging the norm can only be a good thing. Even if that spells potentially bad news for Coco the Monkey.

 

Innovations in cereal 2020

 

Downloads