With the right range, there’s still plenty of profit for wholesalers to milk in the cereal & cereal bars category, says Nikki Allen.
The way Brits eat breakfast is changing. Once, a bowl of cereal was the near-universal start to the day, helped in the advertising heyday of the 1980s by massive campaigns from suppliers. But last year, research firm Mintel found that sales dropped 6%, as health concerns and the rise of breakfast alternatives hit the sector.
Paradoxically, more people than ever before ate breakfast, with 600,000 fewer Brits skipping their morning meal. For today’s busy consumers, 13% of breakfasts are now eaten on the go or out of the home, rather than at the dining table, grocery research body IGD says.
Wholesalers are well placed to cash in on these moves, as the opportunities for retailers are huge. Cereal bars and breakfast biscuits might be small in size, but they’re big in demand.
There’s great potential for your foodservice customers, too, providing you stock up on the range and formats they need. Around 50% of adults eat out for breakfast at least twice a month, with a quarter going to a café or restaurant every week, according to Mintel.
So with all these changes afoot, does your cereal & cereal bars range have enough get up and go?
Cut sugar for sweeter sales
The cereal sector might be down, but it’s definitely not out. Kellogg’s, for instance, cites research finding that cereals still make up 62% of consumers’ breakfasts. With plenty of innovations afoot from major suppliers, there’s every chance of resurgence in the category – as long as manufacturers can cut the sugar content.
Francesca Davies, group head of category at Weetabix, says: “Cereal brands with good health credentials are must-stocks. Seven in 10 consumers are influenced by concerns over the health benefits of cereal and are looking to reduce the sugar intake in their diet.”
Andy Howey, head of sales at Honey Monster Puffs and Good Grain owner Monster Brands, agrees: “Concern surrounding sugar content in cereal has caused consumers to lose trust in brands marketed at children,” he says. “The category has faced intense scrutiny and has been high on the media agenda, so wholesalers need to adapt their ranges accordingly.”
Brands have been busy reformulating their cereals in response to these worries.
Earlier this year, Kellogg’s announced it would cut Coco Pops Original’s sugar content by 14%. Since 2010, it has also reduced the sugar in Bran Flakes by 30% and in Special K by 10%. Nestlé Cereal Partners has rolled out low-sugar variants across some of its cereals, including Cheerios. Honey Monster Puffs has also had a 25% sugar reduction, while Weetabix added all-green traffic lights to packs.
“Consumers will be watching closely to monitor the development of cereal and cereal bar recipes. The category needs to be wary of staying true to these promises,” says Monster Brands’ Howey.
Less gluten, more protein
Sugary cereals might be on the way out, but protein-packed products are on the way up and should be widely on offer in your depots, say suppliers.
Howey says: “Wholesalers can boost their profits by following consumer health trends, which are reflected in the cereal category’s growth areas: high-protein cereals, granola and gluten-free.”
Weetabix’s Davies adds: “Protein cereals are the fastest growing segment in the category, up by 7.3% due to a 40% increase in consumers looking to increase the protein in their diet. Weetabix has a 54% share of this market and is now the biggest selling cereal in the UK.”Megan Gemmill, channel marketing executive at Cereal Partners UK, supplier of Nestlé cereals Cheerios and Shreddies, says: “Wholesalers should stock products that keep up with the current food trends and dietary requirements, especially with the growth of protein and gluten-free cereals. These add great value to your retail and foodservice customers, since Mintel data shows that 13% of households now avoid gluten.”
A major reason for the decline in the cereal market is down to the growth of a wider choice of breakfast products – on-the-go formats in particular. From cereal pots to breakfast bars to ‘overnight’ chilled porridge, the sector has potential, as it taps into consumers’ busy lifestyles.
Breakfast biscuits are now worth £485m and work well for convenience retailers with limited shelf space, who still want to offer on-the-go breakfast options. Mondelez International, for instance, launched Belvita, based on the insight that one in three working people skip breakfast during the week, often because of a lack of time.
“Breakfast biscuits and bars are tipped for fast growth due to the increasing popularity of food on-the-go,” says Monster Brands’ Howey. “Consumers are looking for portable foods, whilst demanding a meal that provides energy.”
Tony Stone, co-founder and managing director of oats brand Stoats, notes: “Our Porridge Oat Bars are our top-selling product range and we’ve seen our single sales increase by 118% so far this year. As trends move towards eating on-the-go, consumers are more than ever looking for a wholesome breakfast while going about their busy lifestyle.”
In fact, the cereal bars market is worth £300m, and is ripe with innovation. Gluten-free bread range Genius recently tapped into the sector, showing the trend for health is alive and well in the free-from category, too. “The free-from biscuit category is now worth £100m, with healthy biscuits growing at 31%. Consumers are definitely looking for something new in the breakfast-to-go sector,” says Dave Shaw, Genius’ commercial director.
Stoats’ Stone adds: “Wholesalers should stock cereal bars that consumers love the taste of, trust and want to keep coming back to. Foodservice and convenience retail outfits are working with small ranges in this category, so each product needs to make an impact with the consumer, otherwise it’s wasting valuable space.”
Don’t forget the basics
With all the focus on health, wholesalers must remember that taste still counts when it comes to offering the right range, suppliers say.
“While health is a major driver in the sector, it’s not the only one,” argues Monster Brands’ Howey. “With 41% of breakfast-eaters saying that they value taste over healthiness, there is clear demand for both. Wholesalers need to consider how these attitudes will affect the performance of their stock, and use market insights to select product ranges in the cereal and bars sectors.”
Think about pack sizes, too, and consider small formats for both retail and foodservice customers, he urges: “Single households are on the rise, so sample size packs are the ideal impulse buy for consumers looking to grab cereal on-the-go and for a smaller, individual portion that takes up minimal storage space in stores.”
As well as stocking the bestselling brands, says Cereal Partners’ Gemmill, try to mix up your retail offering up with new products: “It’s important to give more breadth to your range by including new products, as this gives retailers the option to provide something new and different for shoppers. You should also stock pricemarked packs, and have pack sizes and case sizes that will comfortably fit into smaller stores.
“But bear in mind that within your foodservice range, brands aren’t as relevant as products are often decanted. Products like Harvest Home are a great choice, as quality is assured with the Nestlé brand, whilst offering great value.”
Make your merchandising pop
Wholesalers can make the most of their range of cereals and cereal bars with the right merchandising, clever displays and by running relevant promotions, suppliers suggest.
“Using point-of-sale to attract retailers in-depot and pointing out the top-selling products can help boost core range sales,” says Gemmill. “Wholesalers can also try using banners and ‘bus stops’ to communicate any new products.”
You can also try cross-category promotion, to upsell with retail and foodservice customers: “If there is an opportunity to dual site in-depot, do so,” urges Weetabix’s Davies. “Our Weetabuddies campaign encourages consumers to add real fruit to Weetabix, so cash & carries could place a free-standing display unit of cereal near fresh fruit.”
Stoat’s Stone suggests a similar approach: “Offering plastic spoons next to our Porridge Quick Pots can up margins to around 250% for retailers, so set up this display in your depot,” he advises.
Finally, to make it easier for retailers to navigate your depot and find what they need, look at category management advice from suppliers – Weetabix and Kelloggs have planograms online to show you how best to lay out your aisles, for instance.
“Breakfast bars have been doing really well in my stores, so we’re expanding the range. Cereal sales are quite flat, but to-go formats like bars and pots are flying out as people pick up their coffees. Our biggest sellers are Trackers and Belvita, and the porridge pots went well in winter.”
James Brundle, Spar,
“Time is precious for customers, so on-the-go cereal pots have really grown in popularity. It’s a good idea, as they’re so convenient, and consumers can just add milk or water and they’re good to go. They also take up little space on our shelves. I’d like to see wholesalers stock more of them.”
Avtar Sidhu, Simply Fresh
“There’s definitely a market for eating cereal in a café. We sell 40 different types of cereal from all over the world, all day, and lots of milks and toppings. Our biggest sellers are British classics like Ready Brek and Coco Pops, and unusual American brands.”
Catherina Casey, Chromos Café
“Cereals and porridge are always popular, as families see café breakfasts as a good time to get together. Healthy options are really important and, for us, they’re seasonal, with a peak in the summer. People are happy to pay more for good quality cereals.
“We want to offer more gluten-free variants, but they’re hard to find, so we have to rely on specialist wholesalers. It would be great to see more of these in depots.”
Diane Odling-Smee, Baskervilles