Cereals take new forms to boost health

Soaring raw material costs bumped up cereal prices this year, resulting in fierce competition as brands fought to offset price hikes with high promotional activity. This has led to a slowed category growth of just 3.2% to £1.378bn compared with a 6.7% increase to £1.335bn 12 months ago, while volumes remained static.

One thing that hasn't changed is the imortance of health and wellbeing as a key driver. Both Weetabix and Special K - the top-selling brands - stand head and shoulders above their rivals, thanks in no small part to their healthy image but also NPD, with a new Weetabix Bitesize rolled out in August backed by a £2m campaign.

Special K's success was also aided by the launch of Special K Oats and Honey in January. The line extensions are appealing to a wider audience, according to Asda cereal buyer Phil Hancock. "Special K has more variants that are hitting more consumers. Its 'fuller for longer' message reaches more men and women. We are all in to shape management to an extent."

Top Launch - Breakfast Projects (Dorset Cereals) 
In the age of the Wii, cynics may scoff at the idea of offering children a breakfast cereal that includes a kit to build a model Victorian theatre, but Dorset Cereals' launch certainly delivers everything parents look for, being healthy, fun and educational. Breakfast Projects contain a range of model-making projects, come in two flavours - No. 01 Original and No.02 Apple - and even manage to fit in with the National Curriculum.
Other healthy cereals have posted promising growth - Quaker Oatso Simple was up 11.7% to £35.2m and Kellogg's Fruit 'n Fibre posted a 6.8% increase to £21.8m.

And the category also saw the arrival of a new player, with Eat Natural, the healthy snack bar manufacturer, launching a range of mueslis. Following its sale to Wellness Foods, Dorset Cereals also continues to innovate, with a Honey Granola, Fantastically Fruity Roasted and Toasted Muesli, and a children's range called Breakfast Projects.

However, despite childhood obesity concerns and the Ofcom advertising ban, chocolate cereals aimed at children are driving the strongest category growth.

Weetabix Weetos posted the highest growth in the category, with an increase of 31.4% to £15.9m, and Coco Pops also performed well with a sales increase of 9.9% to £46.4m. The ban has had little effect on these products and indeed cereals containing cocoa are now perceived as healthier than sugar-frosted varieties, says Hancock. "Consumers are moving away from Frosties to Coco Pops. However, in reality they are not that much different in sugar content."

As the recession continues, Hancock predicts there will be a shift towards own label, which has suffered due to high promotional activity among brands. Traditional cereals, including Kellogg's Corn Flakes, will benefit too. "When times are hard people go back to what they know and trust." 

View The Grocer's definitive Top Products 2008 survey