As two big players launch cereals that manage to be both healthy and chocolatey, Chloe Ryan discovers what these angel foods mean for the rest of the breakfast market
First Weetabix Chocolate. Now Coco Pops Choc 'N' Roll. The cereal category is enjoying a watershed moment this summer as not one but two new products hit the shelves having passed Ofcom's draconian nutrient profiling test making them the first chocolate cereals that can be advertised to children.
For a category that's been so out of favour with the health police, this sort of NPD has to be good news as does Kellogg's announcement that it is planning to reduce sugar levels across the rest of its Coco Pops range by 15% by mid 2011. But what does it mean for the products that currently carry the health mantle, such as porridge? And what about the other breakfast staples not to mention the many foods trying to muscle into the market?
Paradoxically, Ofcom's constraints on advertising have not, to date, had a particularly adverse impact on sales of chocolate cereals. Sales of Coco Pops have risen 3.3% in value to £61.1m over the past year and 7.5% in volume [SymphonyIRI 52w/e 19 June].
The category as a whole, however, hasn't exactly been going great guns. Although at-home breakfast consumption has risen 1% year-on-year to 18 billion occasions, making it the fastest-growing meal of the day, it has fallen among 35 to 44-year-olds and 17 to 34-year-old women. And when you drill down to the ready-to-eat cereals market, a slender 1.1% growth in value sales is undermined by a 1% decline in volumes [SymphonyIRI].
In short, people are buying less cereal, which is why the recent chocolatey innovation could be so important, especially when you consider children are a key target for cereals manufacturers, accounting for 22% of consumption. While Kellogg's targeted young adults with the launch of Krave, in January, it has turned its attention back to children with Coco Pops Choc 'N' Roll.
Weetabix will be hoping its new kids' cereal turns the brand's fortunes around, following a 4.8% decline in sales over the past year to £100.1m [SymphonyIRI]. However, the new health conscious chocolate cereals could have a knock-on effect for the hitherto health champion: porridge.
Over the past few years, the development of a host of quick-cook products has revived porridge's fortunes. In the last year alone, sales jumped 10.4% in value to £128.9m, and 7.6% in volume [SymphonyIRI 52w/e 19 June 2010].
The Arctic conditions this winter helped. Rude Health porridge sales were up 81% during this period, claims managing director Nick Barnard, and in December Quaker reported the biggest sales uplift in the company's 100-year history.
Quaker's quick-cook Oatso Simple is the market-leading porridge brand by value, with sales up 23.6% in value over the past year [SymphonyIRI]. To build on this, Quaker is adding Honey & Almond flavour and a limited-edition Winter Pudding line. Its Sweet Cinnamon flavour, which was introduced last year, generated 40% incremental sales, says Quaker general manager David Murray.
The consensus is that the porridge category is in such rude health that it has nothing to fear from other types of cereal even if the latter can now be advertised to kids. As Quaker points out, it has its own product specifically aimed at children. Last August, it launched Paw Ridge, a quick-cook porridge designed to appeal to children. It has generated £1.6m in sales since launch [SymphonyIRI].
Convenience remains a key selling point. In October, Jordans launched Quick and Creamy porridge, which cooks in three minutes. Mornflake has also been getting in on the quick-cook act, and sales of its Superfast Oats have grown 19.8% to £2.3m over the past year [SymphonyIRI]. In September it will be raising money for Breast Cancer Care, selling pink packets of Instant Porridge Oats with added Oatbran (rsp: £1.99). This, together with a new Mornflake Swiss-style muesli with apple, is expected to appeal to women over 35 who are more concerned about health benefits.
Curiously, Quaker's Chunky Traditional porridge, which takes five times as long to cook, remains one of its bestselling SKUs, reflecting loyalty to everyday favourites among breakfast buyers and oats' supremely healthy reputation, which has allowed them to expand sales outside of the winter months. "The hots segment has continued to drive category growth outside of the traditional season," says Quaker's Murray. "Although seen as a winter warmer, porridge is a popular breakfast all year round because of its health credentials."
While NPD has helped the porridge category maintain momentum, it's given cereal bars a new dawn rising. The past year has seen the launch of a savoury Marmite bar, Monster Puffs bar and McVitie's Medley range of Hobnob and Digestive-based bars, which appeared on-shelf in June.
Thanks to their convenience and health credentials, cereal bars account for a growing proportion of all breakfast occasions, according to Datamonitor. The cereal bars market was worth £393m in 2009. "In 2009 cereal bars were worth 21.7% of the combined breakfast cereal and cereal bars market," says analyst Michael Hughes. "By 2014 it is expected to be 24.7%." As in ready-to-eat cereals, Kellogg's dominates, with its Nutri Grain, Special K and Rice Krispies Squares all bestselling products.
Sales are also helped by the fact that consumers see cereal bars as a healthy alternative to confectionery. But they come with a price warning, says Hughes. The cost-per-gram is considerably higher for bars than standard cereals, which threatens an exodus if, as is likely, spikes in commodity prices push up the ticket.
There may yet be some movement away from bars back to the comparatively more affordable cereals, which is by far the dominant breakfast food. The same applies to bread and rolls, the second most popular breakfast foods, which make an appearance at 36% of morning meals.
"It has been the quickest rise in wheat prices seen since 1973," says Gary Sharkey, procurement director of Rank Hovis. "I don't know [when bread prices will go up]. But I don't think there is a business that can ignore that wheat prices have gone up between 70% and 80%."
Bread's share of the breakfast market is already under pressure. Value sales of bread are down 3% year-on-year [SymphonyIRI] as bread finds itself not only having to contend with rising commodity prices, but also competition from other foods trying to break the breakfast market. "We're competing for category share against the likes of cereal, dairy, pastries and fresh fruit," says Kingsmill group brand manager Sarah Hilliar.
Kingsmill has risen to the challenge with new Oatilicious specifically designed for breakfast. But with one in four full-time workers eating breakfast out of the home, ready-to-eat bakery formats continue to thrive. French supplier Délifrance UK reports a rapid rise in sales of its viennoiserie and brioche products. Sales of croissants from in-store bakeries, meanwhile, have grown 33.4% [Kantar 52w/e 13 June].
Other morning goods, such as crumpets, muffins, and waffles, which are easy to eat on the go, are also performing well, says Warburtons category director Martin Garlick, who adds sales of wrapped morning goods have grown 4.5% over the year. Warburtons pack of six crumpets is the bestselling wrapped breakfast SKU, he claims, with value up 19.5% year-on-year to £42m.
Hovis launched a range of branded morning goods, including crumpets and English muffins, into Tesco and Asda in October. The company says the range now accounts for about a 15% share of morning goods sales where the products are stocked.
"There has been very good performance people are looking for variety, and Continental products are performing well, especially smaller handheld items, such as brioche rolls," says Ed Milner, head of category management at Hovis.
Milner believes sales of morning goods could be increased if major retailers install clearer signage. "One of the major things we can do is talk to the shopper more about breakfast in the fixture," he says. "We need to segment the morning goods area a bit better and highlight a breakfast bakery section." Hovis is talking to retailers about just that. "We are working on how that would look in-store, with planograms and signage recommendations," he says.
Kingsmill's Hilliar adds that cross-category promotions could help drive sales of bread as a breakfast product. "As a brand we have witnessed a sales uplift in the past by running cross-promotions with key breakfast goods," she says. "Successful bread partners include morning spreads and, at weekends, bacon, eggs and juice."
If Hilliar has her way, bread will soon be sharing shelf space with spreads in an increasing range of formats, it seems. Keen to boost appeal on the breakfast table, Premier Foods is offering jam and marmalade in squeezy packs rather than focusing on endless new flavours.
"Strawberry and raspberry are the most popular flavours and people aren't looking for anything new," says Versha Patel, head of sweets at Premier Foods, which owns the Hartley's jam brand, Robertson's marmalade, Gale's honey and Sun-Pat peanut butter. "The only new thing people want is more convenience."
Although the product is not new, Nutella has enjoyed success by pitching itself at a new occasion breakfast. Sales have risen 27.4% to £23m [Nielsen 52w/e 12 June] following the brand's 'wake up to Nutella' TV, radio and sampling campaign.
The brand has also been working hard to emphasise the hazelnut content of Nutella in an attempt to give it a healthy breakfast image. Duerr's, meanwhile, is less concerned with health than milking the demand for provenance. It has launched a preserve made with only English-grown blackberries, following the success of its English strawberry jam.
Patel says the spreads category is highly promotion driven, an attribute it shares with yoghurts. According to Nielsen, 58.6% of yoghurt was sold on deal in the past three months [12w/e 12 June]. This strategy appears to have worked the overall chilled yoghurts and pot desserts market grew 4.7% in value to £2.05bn [Nielsen], while volumes increased 3.9%.
The number of occasions when yoghurt is eaten at breakfast increased 8% between 2006 and 2009, says Jonathan Dee, interim marketing director of Müller Dairies. "There is enormous potential as it only amounts to 3.5% of breakfasts," he says. "If we could increase this to 5% it would add 245 million pots to annual sales."
Müller is hoping to raise awareness of yoghurt at breakfast, with its new Bio Yoghurt Corner brand (see box p50) sponsoring the Classic FM breakfast programme. Danone also sees breakfast as a big opportunity. "We know cereal consumption is huge in the UK and why shouldn't consumers put yoghurt on their cereal?" says strategy governance director Bryan Martins. He says Danone is considering developing a product for this purpose. In February, Rachel's launched pouring yoghurt to do just that.
Benecol argues sales of its cholesterol-lowering yoghurt and yoghurt drinks are being driven by breakfast. "Breakfast is the time when consumers make their healthiest food choices of the day," says Esther van Onselen, marketing manager for Benecol Europe. That is until the weekend comes, when bacon and eggs are on the menu. According to Heinz, there has been an increase in the number of cooked breakfasts which can only have been helped by the UK heart health bodies lifting their advisory limits on egg consumption.
Egg sales certainly look pretty healthy. The UK egg market is worth £799m, up 2.9% in value on last year, partly boosted by a shift to more expensive free-range eggs, which have grown in value by 20% over the past two years.
"In the past four weeks, free-range has finally become more than 50% of the market," says Alastair Johns, assistant brand manager at Noble Foods.
He says promotions have helped drive the market. "A lot of retailers have done bigger packs to try and drive weight of purchase. There has been a lot more activity in the past two years."
Meanwhile, bacon has remained popular because it is cheap and versatile, says Chris Lamb, head of marketing at BPEX. Volumes of bacon are up 5%, value is up 3% [Kantar 52w/e 13 June]. Lamb says there are opportunities to grow the premium end with clearer labelling and signage.
"The category has the potential to perform better if people understand that different flavours can be suited for different occasions," he says. "For example, a sweet cure bacon could be labelled 'ideal for a weekend breakfast'."
Premium sweet cured bacon is a long way from the Toast Me! bacon and egg breakfast pop tarts launched into the UK last week. But if they take off, a 'grab-and-go' full English might eventually make it on to the weekday morning menu of millions of time-poor Brits, too.
Focus On Breakfast
First Weetabix Chocolate. Now Coco Pops Choc 'N' Roll. The cereal category is enjoying a watershed moment this summer as not one but two new products hit the shelves having passed Ofcom's draconian nutrient profiling test making them the first chocolate cereals that can be advertised to children.
For a category that's been so out of favour with the health police, this sort of NPD has to be good news as does Kellogg's announcement that it is planning to reduce sugar levels across the rest of its Coco Pops range by 15% by mid 2011. But what does it mean for the products that currently carry the health mantle, such as porridge? And what about the other breakfast staples not to mention the many foods trying to muscle into the market?
Paradoxically, Ofcom's constraints on advertising have not, to date, had a particularly adverse impact on sales of chocolate cereals. Sales of Coco Pops have risen 3.3% in value to £61.1m over the past year and 7.5% in volume [SymphonyIRI 52w/e 19 June].
The category as a whole, however, hasn't exactly been going great guns. Although at-home breakfast consumption has risen 1% year-on-year to 18 billion occasions, making it the fastest-growing meal of the day, it has fallen among 35 to 44-year-olds and 17 to 34-year-old women. And when you drill down to the ready-to-eat cereals market, a slender 1.1% growth in value sales is undermined by a 1% decline in volumes [SymphonyIRI].
In short, people are buying less cereal, which is why the recent chocolatey innovation could be so important, especially when you consider children are a key target for cereals manufacturers, accounting for 22% of consumption. While Kellogg's targeted young adults with the launch of Krave, in January, it has turned its attention back to children with Coco Pops Choc 'N' Roll.
Weetabix will be hoping its new kids' cereal turns the brand's fortunes around, following a 4.8% decline in sales over the past year to £100.1m [SymphonyIRI]. However, the new health conscious chocolate cereals could have a knock-on effect for the hitherto health champion: porridge.
Over the past few years, the development of a host of quick-cook products has revived porridge's fortunes. In the last year alone, sales jumped 10.4% in value to £128.9m, and 7.6% in volume [SymphonyIRI 52w/e 19 June 2010].
The Arctic conditions this winter helped. Rude Health porridge sales were up 81% during this period, claims managing director Nick Barnard, and in December Quaker reported the biggest sales uplift in the company's 100-year history.
Quaker's quick-cook Oatso Simple is the market-leading porridge brand by value, with sales up 23.6% in value over the past year [SymphonyIRI]. To build on this, Quaker is adding Honey & Almond flavour and a limited-edition Winter Pudding line. Its Sweet Cinnamon flavour, which was introduced last year, generated 40% incremental sales, says Quaker general manager David Murray.
The consensus is that the porridge category is in such rude health that it has nothing to fear from other types of cereal even if the latter can now be advertised to kids. As Quaker points out, it has its own product specifically aimed at children. Last August, it launched Paw Ridge, a quick-cook porridge designed to appeal to children. It has generated £1.6m in sales since launch [SymphonyIRI].
Convenience remains a key selling point. In October, Jordans launched Quick and Creamy porridge, which cooks in three minutes. Mornflake has also been getting in on the quick-cook act, and sales of its Superfast Oats have grown 19.8% to £2.3m over the past year [SymphonyIRI]. In September it will be raising money for Breast Cancer Care, selling pink packets of Instant Porridge Oats with added Oatbran (rsp: £1.99). This, together with a new Mornflake Swiss-style muesli with apple, is expected to appeal to women over 35 who are more concerned about health benefits.
Curiously, Quaker's Chunky Traditional porridge, which takes five times as long to cook, remains one of its bestselling SKUs, reflecting loyalty to everyday favourites among breakfast buyers and oats' supremely healthy reputation, which has allowed them to expand sales outside of the winter months. "The hots segment has continued to drive category growth outside of the traditional season," says Quaker's Murray. "Although seen as a winter warmer, porridge is a popular breakfast all year round because of its health credentials."
While NPD has helped the porridge category maintain momentum, it's given cereal bars a new dawn rising. The past year has seen the launch of a savoury Marmite bar, Monster Puffs bar and McVitie's Medley range of Hobnob and Digestive-based bars, which appeared on-shelf in June.
Thanks to their convenience and health credentials, cereal bars account for a growing proportion of all breakfast occasions, according to Datamonitor. The cereal bars market was worth £393m in 2009. "In 2009 cereal bars were worth 21.7% of the combined breakfast cereal and cereal bars market," says analyst Michael Hughes. "By 2014 it is expected to be 24.7%." As in ready-to-eat cereals, Kellogg's dominates, with its Nutri Grain, Special K and Rice Krispies Squares all bestselling products.
Sales are also helped by the fact that consumers see cereal bars as a healthy alternative to confectionery. But they come with a price warning, says Hughes. The cost-per-gram is considerably higher for bars than standard cereals, which threatens an exodus if, as is likely, spikes in commodity prices push up the ticket.
There may yet be some movement away from bars back to the comparatively more affordable cereals, which is by far the dominant breakfast food. The same applies to bread and rolls, the second most popular breakfast foods, which make an appearance at 36% of morning meals.
"It has been the quickest rise in wheat prices seen since 1973," says Gary Sharkey, procurement director of Rank Hovis. "I don't know [when bread prices will go up]. But I don't think there is a business that can ignore that wheat prices have gone up between 70% and 80%."
Bread's share of the breakfast market is already under pressure. Value sales of bread are down 3% year-on-year [SymphonyIRI] as bread finds itself not only having to contend with rising commodity prices, but also competition from other foods trying to break the breakfast market. "We're competing for category share against the likes of cereal, dairy, pastries and fresh fruit," says Kingsmill group brand manager Sarah Hilliar.
Kingsmill has risen to the challenge with new Oatilicious specifically designed for breakfast. But with one in four full-time workers eating breakfast out of the home, ready-to-eat bakery formats continue to thrive. French supplier Délifrance UK reports a rapid rise in sales of its viennoiserie and brioche products. Sales of croissants from in-store bakeries, meanwhile, have grown 33.4% [Kantar 52w/e 13 June].
Other morning goods, such as crumpets, muffins, and waffles, which are easy to eat on the go, are also performing well, says Warburtons category director Martin Garlick, who adds sales of wrapped morning goods have grown 4.5% over the year. Warburtons pack of six crumpets is the bestselling wrapped breakfast SKU, he claims, with value up 19.5% year-on-year to £42m.
Hovis launched a range of branded morning goods, including crumpets and English muffins, into Tesco and Asda in October. The company says the range now accounts for about a 15% share of morning goods sales where the products are stocked.
"There has been very good performance people are looking for variety, and Continental products are performing well, especially smaller handheld items, such as brioche rolls," says Ed Milner, head of category management at Hovis.
Milner believes sales of morning goods could be increased if major retailers install clearer signage. "One of the major things we can do is talk to the shopper more about breakfast in the fixture," he says. "We need to segment the morning goods area a bit better and highlight a breakfast bakery section." Hovis is talking to retailers about just that. "We are working on how that would look in-store, with planograms and signage recommendations," he says.
Kingsmill's Hilliar adds that cross-category promotions could help drive sales of bread as a breakfast product. "As a brand we have witnessed a sales uplift in the past by running cross-promotions with key breakfast goods," she says. "Successful bread partners include morning spreads and, at weekends, bacon, eggs and juice."
If Hilliar has her way, bread will soon be sharing shelf space with spreads in an increasing range of formats, it seems. Keen to boost appeal on the breakfast table, Premier Foods is offering jam and marmalade in squeezy packs rather than focusing on endless new flavours.
"Strawberry and raspberry are the most popular flavours and people aren't looking for anything new," says Versha Patel, head of sweets at Premier Foods, which owns the Hartley's jam brand, Robertson's marmalade, Gale's honey and Sun-Pat peanut butter. "The only new thing people want is more convenience."
Although the product is not new, Nutella has enjoyed success by pitching itself at a new occasion breakfast. Sales have risen 27.4% to £23m [Nielsen 52w/e 12 June] following the brand's 'wake up to Nutella' TV, radio and sampling campaign.
The brand has also been working hard to emphasise the hazelnut content of Nutella in an attempt to give it a healthy breakfast image. Duerr's, meanwhile, is less concerned with health than milking the demand for provenance. It has launched a preserve made with only English-grown blackberries, following the success of its English strawberry jam.
Patel says the spreads category is highly promotion driven, an attribute it shares with yoghurts. According to Nielsen, 58.6% of yoghurt was sold on deal in the past three months [12w/e 12 June]. This strategy appears to have worked the overall chilled yoghurts and pot desserts market grew 4.7% in value to £2.05bn [Nielsen], while volumes increased 3.9%.
The number of occasions when yoghurt is eaten at breakfast increased 8% between 2006 and 2009, says Jonathan Dee, interim marketing director of Müller Dairies. "There is enormous potential as it only amounts to 3.5% of breakfasts," he says. "If we could increase this to 5% it would add 245 million pots to annual sales."
Müller is hoping to raise awareness of yoghurt at breakfast, with its new Bio Yoghurt Corner brand (see box p50) sponsoring the Classic FM breakfast programme. Danone also sees breakfast as a big opportunity. "We know cereal consumption is huge in the UK and why shouldn't consumers put yoghurt on their cereal?" says strategy governance director Bryan Martins. He says Danone is considering developing a product for this purpose. In February, Rachel's launched pouring yoghurt to do just that.
Benecol argues sales of its cholesterol-lowering yoghurt and yoghurt drinks are being driven by breakfast. "Breakfast is the time when consumers make their healthiest food choices of the day," says Esther van Onselen, marketing manager for Benecol Europe. That is until the weekend comes, when bacon and eggs are on the menu. According to Heinz, there has been an increase in the number of cooked breakfasts which can only have been helped by the UK heart health bodies lifting their advisory limits on egg consumption.
Egg sales certainly look pretty healthy. The UK egg market is worth £799m, up 2.9% in value on last year, partly boosted by a shift to more expensive free-range eggs, which have grown in value by 20% over the past two years.
"In the past four weeks, free-range has finally become more than 50% of the market," says Alastair Johns, assistant brand manager at Noble Foods.
He says promotions have helped drive the market. "A lot of retailers have done bigger packs to try and drive weight of purchase. There has been a lot more activity in the past two years."
Meanwhile, bacon has remained popular because it is cheap and versatile, says Chris Lamb, head of marketing at BPEX. Volumes of bacon are up 5%, value is up 3% [Kantar 52w/e 13 June]. Lamb says there are opportunities to grow the premium end with clearer labelling and signage.
"The category has the potential to perform better if people understand that different flavours can be suited for different occasions," he says. "For example, a sweet cure bacon could be labelled 'ideal for a weekend breakfast'."
Premium sweet cured bacon is a long way from the Toast Me! bacon and egg breakfast pop tarts launched into the UK last week. But if they take off, a 'grab-and-go' full English might eventually make it on to the weekday morning menu of millions of time-poor Brits, too.
Focus On Breakfast
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