A Cereal Star
Nonetheless, nine out of 10 Americans report eating breakfast, with nearly half eating the meal every morning of the week. This has been boosted by the perception (supported by a number of studies) that consuming breakfast imparts numerous health and mental benefits. However, the breakfasts of today differ greatly from the traditional repast.
Time-starved consumers lack the time to prepare eggs, sausage, bacon, toast, pancakes, and other foods generally associated with breakfast. Instead, a breakfast today is more likely to be a product quickly prepared, if prepared at all, and consumed on the way to work or school. The March 2001 Shopper Report ranked breakfast as fifth among the top 10 categories in which convenience is driving the purchase decision. Additionally, the biennial “What America Eats” surveys commissioned by Parade magazine have repeatedly noted Americans' preference for single-serve, portable foods compatible with a harried lifestyle.
Breakfast manufacturers have responded to this desire, notes Mintel International Group (Chicago), with convenient, handheld foods—many quick microwaveable solutions, others simply bar forms of cereal favorites. Cereals could be regarded as the first truly convenient breakfast option, but the advent and continued refinement of frozen items have led many consumers away from the cereal aisle.
Individual consumption of frozen meals jumped 33% between 1990 and 2000, according to a 2002 report from NPDFoodworld (Rosemont, Ill.). Most of that growth in frozen breakfast foods was seen in such entreés as filled waffles and breakfast sandwiches. As Mintel has found, these new forms of breakfast foods combine all the elements of “traditional” breakfasts, such as bacon and eggs.
As a whole, the market for breakfast foods stood at an estimated $21 billion at the end of 2002, a 9% increase (at current prices) since 1997. However, when inflation is taken into account, a less-rosy picture appears with a market decline of 4% over that period in terms of real dollars. Cereal (all forms) held the largest share of the market at 40%.
A Shrinking Target MarketDespite that status, cereals are enduring tough times, declining an estimated 5% from 1997 through 2002. Mintel finds, however, that the cereal bar sub-segment has enjoyed growth, reflecting the “convenience, health, and new taste trends currently shaping the breakfast foods market.”
The future is not as bright, however. Sales of cereal and cereal bars are expected to drop significantly through 2007, in current and constant (inflation adjusted) prices (-5% and -16%, respectively). The positioning of cereals primarily to children could be largely to blame for these declines.
While increasing through 2005, the number of 5- to 14-year-olds (widely regarded as the main target of most breakfast cereals) is expected to decline through 2010, with the number of 15- to 19-year-olds increasing modestly over that period. Considering the diversification of many cereal manufacturers into handheld/added-convenience cereals with a wider age appeal, Mintel believes the true impact on the industry will be a change of focus.
Nonetheless, with lower percentages of teens 12-17 (as opposed to children, 6-11) reporting that they eat breakfast (according to Simmons Kids and Simmons Teens Surveys—New York), the implication for the industry is that, as children get older, they are more likely to begin to skip breakfast. Of those who have the morning meal, 98% report eating cereal for breakfast, with 75% enjoying toaster pastries and 67% consuming hot cereal or waffles.
Of children who currently eat breakfast, two-thirds are likely to fix it themselves, according to Forecast magazine, which also found 75% of 12- to 17-year-olds will make their own. The influence of children in the purchase of breakfast foods should not be ignored. Family Economics and Nutrition, a USDA publication, found that youngsters influence 20% of cold cereal sales and 50% of hot cereal sales.
Licensed characters are far from the only means of attracting children, however. Fun is also an important draw, and cereal manufacturers have been quick to add enjoyable elements. For example, Quaker Oats (Chicago) introduced Instant Oatmeal Dinosaur Eggs, Sea Adventures, and Treasure Hunt varieties. With the addition of boiling water (okay, parents might want to get involved here) to the dried cereal mix, dinosaurs “hatch” from little eggs, treasure chests melt to produce coins and jewels, and sharks and divers appear in a fizzling, dark blue ocean-colored oatmeal.
Of course, in many instances, home is not the source of a child's breakfast. The National School Breakfast Program served 7.7 million children in 2001, almost twice the number of children of just 10 years prior. Some 72,000 public schools provide breakfast, offering parents ample reason to eschew a morning meal for themselves and still feel that their children are getting a healthy start to the day.
Feeding FastAdults are more apt than children to grab a quick cereal bar or just do without breakfast. The U.S. Census Bureau (Washington) found that workers spend more than 24.3 minutes commuting to work every day, up from 21.7 minutes in 1980. Some 28% of Americans spend at least an hour venturing to and from work each day. Noting this, manufacturers have attempted to position their cereal products as a convenient meal option.
The efforts have been difficult, though, as competition from fast food and even convenience stores has intensified. 7-Eleven (Dallas) has a breakfast menu offering an assortment of moderately priced, transportable sandwiches and snacks. Fast food chains, as well, have ventured further into breakfast territory; Wendy's (Dublin, Ohio) addition of Tim Horton's coffee and bakery concepts in the U.S. is one example. Even pizza places are in the breakfast business, as some have partnered with convenience stores to offer all-day pizza options—breakfast pizza in the morning and more-traditional offerings later in the day.
Mintel notes, “Those categories that will continue to fight an uphill battle are primarily those that are not conducive to being readily eaten 'on the go,' such as cereals and eggs.”
Most beneficial to cereal manufacturers, though, is consumer willingness to try cereal bars for breakfast. While cereal bars have been on the market for decades, they benefited from the recent plunge in cereal sales, believes Mintel, noting the abundance of new products joining the market in the late 1990s. Kellogg's took the cereal bar concept as an opportunity to expand its Rice Krispies brand, which grew to become one of the most popular varieties, posting sales of $140.1 million in 2001.
For the most part, large manufacturers simply regard these bars as an opportunity to get cereal into the hands (and stomachs) of a mobile consumer base. Mintel suggests, “The cereal bar is positioned to be a strong contender in winning the wallet of the on-the-go breakfast food customer.” Nevertheless, Mintel predicts sales of cereal and cereal bars will drop 3.4% per year through 2007 (at constant 2002 prices and adjusted for inflation).
The bar forms of cereal have been one response to convenience concerns, but cereal manufacturers have managed to meet other demands, notably the need for a more-healthful start to the day.
Mintel regards Kashi Go Lean (La Jolla, Calif.) and Kellogg's (Battle Creek, Mich.) Special K with Berries as two cereal products targeting the health-conscious individual and making “inroads even in the mature, saturated market of breakfast cereals.” Manufacturers, however, have been burned with some attempts in the functional cereal market. “Kellogg,” Mintel recalls, “invested a major amount of research and development in its Ensemble line of functional foods based on psyllium, which included cereal, but the product was subsequently withdrawn.”
In many cases, though, manufacturers have sought simply to improve the taste profile of already-nutritious products. New instant varieties pack the same nutritional punch but add such palatable flavors as peaches & cream and apple cinnamon to appeal to a greater number of consumers. Manufacturers hope consumers with microwaves will have hot cereal as an occasional alternative to other breakfast options or as a regular breakfast meal.
Of course, these same manufacturers have also entered the realm of organic cereals, once the domain of smaller companies. Some went the acquisition route, as in Kellogg's purchase of Kashi and Worthington, and General Mills' overtaking Small Planet Foods and its Cascadian Farms brand. Other moves, meanwhile, have been made under the company's own label; note General Mills' launch of Sunrise organic cereal under its Big G/Chex line.
For more information on the reports mentioned in this article, “The Breakfast Market Volume 1: The Consumer” and “The Breakfast Market Volume 2: The Marketplace,” contact Mintel International Group Ltd.; 213 W. Institute Place, Suite 208; Chicago, IL 60610; phone: 312-932-0400. Mintel also plans to release “Breakfast Cereals,” a report on the market in the U.S., in November of this year.
Website Resourceswww.mintel.com — Mintel International Group
www.campden.co.uk/research/current/rmcereal.htm — Raw Materials and Ingredients: Cereals
http://inventors.about.com/library/inventors/blcereal.htm — The History of Breakfast Cereals