Cereals

According to Mintel, the cereal market has grown from just over £1,090m in 2002 to £1,280m in 2007, a 17% increase over the period. Volume is now 432,000 tonnes, a growth of just 7% over the same time frame. This has been due to the strong premiumisation in the market, as higher value products are launched. The consumer is increasingly demanding products that deliver on taste and quality, but above all health.

Graeme Foster, business controller wholesale of Cereal Partners, says: "The wholesale market is very important for Cereal Partners and to secure the optimum performance from the channel we recommend that every wholesaler stocks a range of the best selling cereals.

"All to often we see missed sales opportunities by wholesalers not stocking or displaying the best selling products. Customers use convenience stores as top-up shops or for emergency purchases and expect to see a tight range of best selling brands in-store."

Mintel reports that hot cereal, though accounting for only 12% of the market, had seen strong growth until 2006 driven by the growing consumer interest in oats, and their reported health benefits, including keeping you fuller for longer, and better heart health. RTE (ready to eat) cereal producers have taken advantage of this opportunity and launched a number of oat-based RTE cold cereals.

The Weetabix Food Company has taken note of this with the launch of Oatabix. It says the new cold oats category represents approximately 6% of the total cereal market and is the fastest growing segment.

Tony Corp, marketing controller of Weetabix, says: "One of the key drivers of the breakfast category continues to be oats. Embraced by the consumer for their heart health and cholesterol reducing properties, oats have been growing in popularity for some time as hot cereal. More recently, an emerging new cold oats sector has been developing, led by The Weetabix Food Company. Oats available in formats other than porridge have the advantage of bringing new consumers to oats and growing the cereal category."

Weetabix also updated the packaging on Ready Brek last year and introduced a chocolate variety. Its Alpen Light bars also saw a new addition last year.

Corp adds: "Some wholesalers are very good at detailing new product development and pack size changes to highlight opportunities. We have seen some inventive ideas, including samples being sent out with internal code and product details to create interest and drive initial orders."

Another company focusing on oats is PepsiCo with its Quaker brand. According to PepsiCo, Quaker is the number one brand in the hot sector with a 52.1% value market share. It has doubled in the past five years and is set to double again in the next five.

Carol Garbutt, marketing director of Quaker, says: "Quaker research shows that when it comes to choosing what to eat for breakfast consumers opt for something that fulfils functional needs - convenient, energy-giving and hunger-busting. Women in particular want health, while men are more likely to opt for convenience."

Quaker has created bigger pack sizes for Quaker Oatso Simple and has focused on driving penetration and trial of Quaker ready-to-eat Oat Granola and Oat Muesli ranges.

Garbutt adds: "Quaker, as the number one oats brand, is ideally placed to raise awareness of the risks of raised cholesterol levels, while at the same time offering consumers a delicious way of helping to maintain their cholesterol levels within a healthy range."

According to Dorset Cereals, it is the number one muesli in independents.

Patrick Horton marketing director of Dorset Cereals, says: "The independent retailers that are mainly supplied by wholesalers are incredibly important to Dorset Cereals. For the total market Dorset Cereals has a 22.5% value share, but within the independents the share is over 40%. Dorset Cereals very much see the independent sector as the heart of the business. Premium products such as Dorset Cereals offer wholesalers and their customers a great opportunity to drive value into their business."

Bread and Spreads

According to Mintel, the morning goods market comprises a broad range of bread rolls and bakery snack products. Overall sales of morning goods increased by 11% between 2002 and 2006 to reach £1.8bn. This compares with a 10% rise in bread sales (excluding rolls) over the same period in a market worth £2.11bn

Sarah Miskell, category director at Warburtons, says: "Breakfast remains a popular eating occasion for consumers to enjoy bread with 32% of all bread being eaten in the morning and 62% of breakfasts containing toast. White is still by far the most popular type of bread, and its value sales have increased in value by 11.3% over the last 12 months.

Toast remains an integral part of the nation's start to the day and Warburtons 800g Toastie loaf continues to be the top selling bread product in the market with 6.8% of total wrapped bread sales, worth just over £100m.

"Consumers are still eating breakfast but they are controlling their portion sizes and eating fewer items. However, the 'light' breakfast is in growth with convenient and quick options becoming more important for consumers."

According to Warburtons, consumer purchasing trends in the UK as a whole have shifted recently towards healthier products as shoppers become increasingly more health focused. Warburtons has responded to this with its Healthy Inside Loaf, Wholegrain Goodness and Milk Roll.

Premier Foods added to its range of Hartley's jams in March with Squeezy jam ranges Hartley's Smooth and Hartley's Best.

David Atkinson, general manager for sweet spreads at Premier, says: "Hartley's new Squeezy formats represent real innovation for the jam category and show great alignment with current consumer demand for convenience. The Squeezy packs are specifically designed for convenient and easy use, while retaining the quality consumers expect from Hartley's jam. Heightened consumer awareness of food values and knowledge of what they are eating has increased the demand for better quality product, believing they offer good value for money."

Premier says that consumer insight has shown many children don't like 'bits' in their food and Hartley's Smooth offers a solution.

Last year Unilever introduced squeezy Marmite in a 400g size following the success of the squeezy pack launch in 2006.

According to Unilever, since launching into the market, squeezy Marmite has added incremental growth to the £46m yeast extract spreads category and has seen the value of the Marmite brand increase to £36m in 2007.

Cheryl Calverley, Marmite brand manager of Unilever UK Foods, says: "The launch of the squeezy bottle has proven to be a great success, encouraging existing users to trade up to the more convenient format. The 400g format will appeal to frequent users and larger families, continuing to add value to the category."

Cooked Breakfast

According to Heinz research, the popularity of a cooked breakfast as a weekend occasion is increasing and is viewed as an enjoyable occasion which people take their time over, in contrast to weekday occasions when the pressures of work or getting the children ready for school mean only 6% of breakfasts are cooked a figure which has decreased by 8.5% since 2003.

To make eating beans easier Heinz launched Snap Pots last year and this year it launched Eazy Pots for the foodservice market.

Nathan Ansell, senior brand manager of Heinz Beanz, says: "Heinz has already taken progressive steps to significantly reduce levels of salt and sugar across its entire Baked Beanz range, however, Heinz Reduced Sugar & Salt Baked Beanz offers particularly health conscious consumers an even lower level alternative and is the only product of this type that contains no artificial sweeteners."

Heinz Foodservice says research shows that the British fry up is still the favoured breakfast out of home, with 56% of people enjoying one, and other cooked options and hot rolls/sandwiches accounting for 15% and 14% of the market, respectively.

Tal Drori, brand manager for Heinz Foodservice, says: "To support our wholesale customers, we are upping the ante on providing national and bespoke promotions to generate pull through in depot, with advertising and PR mechanics driving traffic."

Trevor Richardson, national account controller of Heinz Foodservice, says: "One of the challenges is identifying how successful our products are specifically in relation to breakfast. While Heinz Beanz are synonymous with breakfast and the occasion is likely to be behind more than 50% of consumption, I don't think wholesalers know when they sell a case of products like HP Sauce or Heinz Tomato Ketchup whether they are going to be used purely for breakfast, whereas freshly squeezed orange juice is more obvious. If we can help wholesalers gauge this information, they cannot only sell the products, but the whole meal occasion.

"The challenge is more than just getting people out their front door. Although data shows 52% of consumers haven't eaten breakfast out of home in the last three months, we also have to capture the interest of those that skip breakfast altogether."

Aiming to help with this Heinz Foodservice has identified four breakfast consumer types to help wholesalers show caterers how to crack this under-capitalised market. These types are Fuel Stop, Grab and Go, Healthy Choice and Total Treat.

Paul McHenery, marketing manager of Kerry Foods, says: "This is going to be an exciting year for Wall's and the wholesale channel is an important route to market for the brand. We have big plans for NPD, new packaging and a new creative campaign to launch later this year with a heavy marketing investment of £4m."

According to Kerry Foods, sausages and bacon play a fundamental role in the UK breakfast category and Wall's remains a key competitor within the sector. It says one in five households buy Wall's and the brand is now worth £64m and is in 6% growth.

Wall's says the breakfast market is vitally important as sausages are eaten for breakfast in one out of three occasions and recent statistics show that 325 million packs of sausages are sold every year.

Wall's Bacon has seen growth of 31% year on year with current sales at £21m. McHenry says: "Critical to our future success is to reduce the bacon market's dependence on excessive price promotions. The success of our bacon so far is based on the fantastic product delivery which drives repeat purchase and continues to build brand loyalty."

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=== Top 10 branded cereals ===

1 WEETABIX 7.64 -0.51

2 KELLOGGS CORNFLAKES 5.16 -0.19

3 KELLOGGS CRUNCHY NUT 4.94 -0.27

4 KELLOGGS SPECIAL K 4.48 0.16

5 KELLOGGS COCO POPS 3.63 0.19

6 KELLOGGS RICE KRISPIES 3.43 0.21

7 NESTLE CHEERIOS 2.61 0.18

8 NESTLE SHREDDIES 2.48 -0.31

9 KELLOGGS FROSTIES 2.45 0.09

10 KELLOGGS SPECIAL K RED BRRS 2.11 -0.01

Source: Nielsen topline RTE market data 52 w/e 29.03.08

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=== heinz fast facts ===

l The in-home breakfast market is now worth £6bn

l There are now 16bn in-home breakfast occasions per year in the UK

l The light breakfast is growing particularly strongly, up 9% from 2003

l Heinz's research shows that cooked breakfasts are growing in popularity at the weekend with 19% of weekend breakfasts featuring a cooked breakfast, up 1.6% since 2003

Source: TNS Worldpanel Usage, 52 w/e end Nov 2006

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