They say “a rising tide lifts all boats.” So perhaps McDonald’s Corp. brought good news with its late January release of 2015 fourth-quarter and fiscal year earnings. In part, officials credited a strong year-end finish to McDonald’s “All Day Breakfast” program, which started last November.
If anything, McDonald’s success supports the notion that consumers truly love breakfast foods and flavor options. So the question is whether that strong, rising tide of sentiment bodes well for consumer packaged breakfast foods.
Market researcher Mintel Group Ltd., Chicago, covered the breakfast foods market with two extensive reports last summer, a “Frozen Breakfast Foods-US” study last July; and a “Hot and Cold Cereal-US” report in August.
Addressing the larger cereals market, Mintel concludes, “Cereal sales are expected to decline through 2020. Consumers are avoiding indulgent cereals in favor of healthier options, turning to more natural cereals with fiber and protein … Manufacturers should consider focusing on cereals people are eating more of: less-processed, better-for-you cereals such as granola, high-fiber cereal, and oats (quick-cooking or regular) to make hot oatmeal, as these products tend to provide more sustenance and are less processed and sugar-laden. Another area of opportunity lies in reformulating existing products to include more whole grains and protein.”
Interestingly, Mintel also suggests that cold cereal manufacturers think more broadly about eating occasions.
“Most consumers believe cereal can be eaten any time of day, which opens up considerable opportunity for manufacturers to market cereal beyond breakfast,” said Mintel. “Sixty-percent or more of consumers by generation say cereal is a great snack food. Given that Millennials are more likely to snack throughout the day instead of eating three standard meals, cereal positioned specifically as a snack is a likely sales growth area.”
Turning to the freezercase, Mintel observed that the only growth category has been frozen breakfast handheld products.
“Current market growth has struggled due to sales declines across all segments, aside from the frozen breakfast handhelds segment,” said Mintel. “The convenience and portability of the frozen breakfast handhelds segment has allowed it to continue performing well, although year-over-year growth has significantly declined.
“Other category segments including frozen breakfast entrées, waffles, and other frozen breakfast foods have struggled to grow as a result of consumer concerns about the healthfulness and ingredients in these products. Future category growth will be driven primarily by the frozen breakfast handhelds segment, which is predicted to have the most growth and represents the largest category market share (36% in 2015).”
Cold Cereal, Hot R&D
Cold cereal category struggles certainly have fueled large-scale R&D programs at General Mills, Quaker Oats (PepsiCo Inc.) and the Kellogg Company.
Last June saw Kellogg launch more than 40 new items across the cereal, snack and freezercase sections. Kellogg then returned last November to say it would launch another 40 new products in 2016.
Headlining last summer’s line-up was new Kellogg’s Origins, a line of six cereals, granolas and muesli that are prepared simply, with no artificial flavors or hydrogenated oils. The lineup features blends of ancient and traditional grains – oats, barley, spelt, quinoa, and KAMUT brand Khorasan wheat. They also include a variety of fruits, nuts, and seeds – including apricots, apples, cranberries, walnuts, almonds, cashews and pumpkin seeds.
Among new items for this year is Special K Nourish, two new cereals with positive nutrition and ingredients the consumer can see in the food. Flavor options include Apple Raspberry Almond and Coconut Cranberry Almond, both with multi-grain quinoa flakes.
Perhaps most interesting is a new Kellogg’s To Go Breakfast Mix, which combines cereal pieces and nuts in two savory options. They come in single-serving pouches and are made to be enjoyed without milk. The cereal pieces are larger than traditional cereal for optimal finger-to-mouth munching and the resealable pouch was ergonomically designed to allow fingers to easily access the food and to fit in a car’s cup holder. They debut in Salted Caramel & Praline Almond, and Cinnamon Roasted Candied Pecan.
Kellogg’s Kashi brand also has been active. The Solana Beach, Calif., business introduced two new organic, non-GMO cereals: Kashi Overnight Oats Made Easy and Kashi Organic Promise Sweet Potato Sunshine cereal.
Kashi says Overnight Muesli includes whole grains such as barley and rye as well as super fruits and seeds including as tangy cherries, crunchy pepitas and chia. Three flavors are: Cherry Cinnamon & Cardamom, Sunflower & Pepita, and Cacao Nib Almond & Coconut.
Officials say Kashi’s Organic Promise Sweet Potato Sunshine cereal features North Carolina sweet potatoes (an excellent source of vitamin A) in a whole-grain flake cereal.
Last year also saw General Mills launch a wide variety of new products across its entire portfolio, including cereals. One noteworthy entry was Nature Valley Toasted Oats Muesli, a blend of toasted oats, sun flower seeds, dried cranberries, raisins, toasted coconut, almonds and pumpkin seeds. Officials note the new muesli can be eaten plain, with milk or yogurt. Each quarter-cup serving has less than 5g of sugar. Available in Original or Blueberry flavors in the US, and Field Berry and Coconut Almond varieties in Canada.
Behind the scenes, General Mills has been equally invested in product reformulation efforts. In part, it said it would make the most popular flavors of Cheerios gluten-free, thanks to a newly developed technology that separates its oats, which are naturally gluten-free, from other gluten-containing grains that find their way into the oat supply. Last June saw General Mills announce it would remove artificial flavors and colors from artificial sources in Big G cereals and replace these ingredients with fruit and vegetable juices and spice extracts. Officials estimated that 75% of the Big G portfolio will meet this claim by January 2016 with the remainder by the end of calendar year 2017.
Speaking of the new year, PepsiCo’s Quaker subsidiary greeted oatmeal season with three new Quaker Gluten Free Oatmeal offerings: Quaker Quick 1-Minute Standard Oats (18oz. canister) and Quaker Instant Oatmeal (single-serve pouches) in both Original and Maple & Brown Sugar flavors. New gluten free varieties join the Quaker Select Starts instant oatmeal line, which includes oatmeals with high fiber, organic, added protein, reduced sugar and weight control formulations.
Forays in Frozen
Mintel recommends that manufacturers promote frozen product similarities to restaurant breakfast options. The Chicago researcher also suggests processors promote eating occasions beyond breakfast.
“Frozen handheld consumers recognize the variety of foods available in restaurants; however they also agree the taste of retail products is comparable to those found in restaurants,” said Mintel. “These consumers also are most likely to agree they eat breakfast in restaurants too often (30%). Frozen breakfast handheld consumers are more likely to purchase these items to save money on dining out—thus they may be open to messaging about scaling back their dining dollars by purchasing similar products, such as breakfast burritos and sandwiches, for at-home consumption.”
Those types of insights aren’t lost on other competitors such as Nestlé Prepared Foods or even Cole’s Quality Foods Inc., a Grand Rapids, Mich., baker. For its part, Nestlé extended its Hot Pockets brand with a new Snack Bites line, including three breakfast options: Bacon, Egg & Cheese; Ham, Egg & Cheese; and Sausage, Egg & Cheese. Elsewhere, Cole’s has branched beyond its frozen Cinnamon French Toast and developed Cole’s Good Morning! Breakfast Bites in a Bacon, Egg & Cheese variety (distributed in Walmart).
Originally appeared in the March, 2016 issue of Prepared Foods as Time to Rise and Shine.