Breakfast Cereals

August 2012

International Markets Bureau
AMERICAN EATING TRENDS REPORT

Unless otherwise stated, all of the information in this report was derived from the NPD Group's National Eating Trends database, updated to November 2010, and reflects the eatings (defined by NPD as the number of times any particular category/item is eaten by an individual in a specified location or time period) of a product at home, or carried away from home. This report does not reflect purchases of food products made through foodservice establishments, or the consumption thereof. NPD monitors the eating habits and attitudes of American consumers by surveying 5000 individuals reporting on 14-day's continuous consumption of all meals and snacks.

For the purposes of this report, when used without further distinction, "cereals" refers to theamalgamation of pre-sweetened, family, natural/bran and hot cereals.


CONSUMPTION DEMOGRAPHICS

  • According to Euromonitor, U.S. retail sales of breakfast cereals stood at US$9.9 billion in 2010, up from US$9.3 billion in 2001, and are forecast to reach US$10.4 billion by 2016. However, these trends are due primarily to higher unit prices, as total consumption of breakfast cereals dropped from 5.1 kg per capita in 2001 to 4.5 kg in 2010 and are projected to decline further, to a total in 2016 of 4.2 kg per person. A maturing market, the unhealthy image of children’s cereals, and competition from foodservice for the hot cereal market are contributing factors (Euromonitor 2012).
  • According to NPD, ready-to-eat (RTE) cereals account for the bulk (78.5%) of all breakfast cereal eatings, while hot cereals account for the remaining 21.5%. Within RTE cereals, all family cereals represented more than half of all eatings, while pre-sweetened cereal eatings accounted for slightly more than one-quarter. NPD reports that between November 2001 and November 2010, the number of eating occasions of ready-to-eat, pre-sweetened cereals dropped from 25% to 22%, while eatings of family cereals increased from 41% to 44%. Eatings of natural/bran cereals remained constant at 11%. As a percentage of total consumption, hot cereals increased from 18% to 22% in the same time period.
Share: Description of this image follows.
Description

Share of Total Eatings of Breakfast Cereals by Type, November 2001-November 2010: Ready-to-Eat Cereal 79% (2001) 78%(2010), All Family Cereal 42% (2001) 43%(2010), Pre-Sweet Cereal 22% (2001) 21%(2010), Brand + Natural Cereal 9% (2001) 10%(2010), Hot Cereal 20% (2001) 21%(2010)

Source: The NDP Group

Core Markets (consumption is at least 20% above the average rate)

  • Pre-sweetened cereal: families, particularly with children 6-12 years of age;
  • Family cereal: single active seniors; Blacks; and adult men on both
    doctor- and self-prescribed diets;
  • Natural/Bran cereal: affluent seniors, particularly women; adults on both doctor- and self-prescribed diets; and
  • Hot cereal: seniors, particularly women and non-white ethnicities.

Underdeveloped Markets (consumption is at least 20% below the average rate)

  • Pre-sweetened cereal: singles, dual-income-no-kids, empty-nesters and seniors;
  • Family cereal: Empty nesters and Singles trend towards lower consumption, however, dual-income-no-kids are the only group to consume 20% under the average consumption rates;
  • Natural/Bran cereal: dual-income-no-kids and families with children under 18; and
  • Hot cereal: dual-income-no-kids and families with children under 18.

CONSUMPTION LOCALE

  • Cereal has a penetration rate of about 90% in U.S. homes (97% in homes with kids), but there are some differences in frequency of consumption from region to region. In terms of types of cereals, pre-sweetened and family cereals are enjoyed more often than the national average in the East North Central region while natural/bran and hot cereals are preferred in the South Atlantic.
  • The majority of U.S. consumers link cereals with breakfast time and state that their cereal eating occasions take place at home at breakfast (91%), with the remaining occasions spread equally between lunch, dinner and as a snack (2.5% each). Cereals are carried from home infrequently (1%).

CONSUMPTION CALENDAR

  • Cereals are consumed fairly evenly over the days of the week, dropping in frequency between Monday (16%) to Sunday (11%).
  • Breakfast cereals are consumed fairly evenly throughout the calendar year, although there is a little seasonal variation, such as a movement to hot cereals in the fall and winter months, and family cereals in the summer. Pre-sweetened and natural/bran cereals show a marginal increase in eating occasions in the spring.

PREPARATION METHODS

  • Hot cereals are prepared on the stove top (46%), the microwave (41%) or consumed without any preparation (11%). Pre-sweetened, family and natural/bran cereals are consumed without preparation virtually all the time.

PLATE COMPOSITION

  • Americans primarily consume cereal as a main meal at home (90%), although hot cereal is used as a side dish on occasion (7%).

COMPLEMENTARY PRODUCTS

  • Most U.S. consumers eat cereal with milk and occasionally fruit, however, those 18-44 years of age report choosing to eat it with yogurt, cottage cheese, milk alternatives, or just eating it plain (Mintel, 2012).

CONSUMPTION BY REGION

Unites States Census Regions: Description of this image follows
Description

Unites States Census Regions - New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont), Mid-Atlantic (New Jersey , New York, Pennsylvania), South Atlantic (Delaware, Maryland, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida, District of Columbia), East North Central ( Illinois, Indiana, Michigan, Ohio, Wisconsin), East South Central (Alabama, Kentucky, Mississippi, Tennessee), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota), West South Central (Arkansas, Louisiana, Oklahoma, Texas), Mountain (Idaho, Montana, Wyoming, Arizona, New Mexico, Colorado, Nevada, Utah), Pacific (Alaska, California, Hawaii, Oregon, Washington)

Source: NPD Group.

Eatings by U.S. Region (%)
North East 19.1
New England 4.2
Mid-Atlantic 14.9
Central   31.3
East North Central 20.3
West North Central 11.0
South 31.4
South Atlantic 17.2
East South Central 6.7
West South Central 7.5
West 18.2
Mountain 7.2
Pacific 11.0

Source: NPD Group.


CANADA – U.S. TRADE

  • According to Statistics Canada, Canada’s exports of breakfast cereal to the continental U.S. was C$362.4 million in 2010, up from C$224.5 million in 2001.
  • In 2010, the central region provided the largest export market for Canadian breakfast cereal exports (34.5%), although it represented only 22% of the U.S. population.
Exports: Description of this image follows.
Description

Canadian Exports of Breakfast Cereals to the Continental1 U.S. by Region2, 2001 and 2010: West 49(2001) 65(2010), Central 65(2001) 125(2010), North East 60(2001) 58(2010), South 47(2001) 105(2010), Total 223(2001) 365(2010)

Source: Statistics Canada.

1 For the purposes of this report, the continental U.S. does not include Maryland, Washington D.C. or Delaware, to remain consistent with NPD data collection.

2 Population shares for the regions were as follows:
2001: North East – 19%, Central – 23%, South – 36%, West – 23%.
2010: North East – 18%, Central – 22%, South – 32%, West – 23%.


NEW PRODUCT EXAMPLES

According to the Mintel Global New Products Database (2012), 481 new cereal products were introduced in the U.S. market between October 2010 and November 2011.

  • Emerald Breakfast On the Go! Nut & Granola Mix range of products are kosher certified and were redesigned as a single serving pack to be available at convenience stores.
  • Kirkland Nature’s Path Ancient Grains is a private label, kosher and USDA-certified organic product and is made with ancient grains, which are positioned as offering a better nutritional profile.
  • Trader Joe's Organic Multigrain Cereal in a Microwavable Bowl contains 5 g of fibre and 4 g of protein.
  • H-E-B Heart Healthy Whole Grain Oatmeal claims to reduce cholesterol, support healthy arteries, and reduce the risk of high blood pressure. The product is high in antioxidants and contains green tea and grape seed extracts. It is free from added sugar, low in sodium and microwaveable.
  •  Cap'n Crunch's Halloween Crunch Sweetened Cereal was repackaged with a cut-out jack-o-lantern design for Halloween 2011. This kosher-certified cereal comprised pillows and ghost shapes that turned milk green and was in a pack made from 100% recycled fibre.

PRODUCT POSITIONING

  • From November 2010 to October 2011, "kosher," "ethical/environmentally friendly package" and "whole grain" were the most prominent claims for cereal product introductions in the U.S., according to Mintel. Also used, but not among the top five claims, were health oriented (low/no cholesterol or fat /no additives or preservatives) and convenience (speed and microwaveable).
Product Introduction: Description of this image follows.
Description

Cereal Product Introductions in the United States by Top 5 Claimes - November 2010 to October 2011: Kosher 284, Ethically-Environmentally Friendly Package 281, Whole Grain 235, Hig Added Fibre 106, Children (5-12) 87

Source: Mintel 2012

  • New packaging (36%) and new products (39%) dominated the cereal product launches in the U.S. between November 2010 and October 2011, according to Mintel. New varieties/range extensions (19%), new formulations (3%) and relaunches (3%) made up the balance of the launches in this time period. Gluten-free ingredients matter to the fewest cereal users overall. However, for those who have gluten-related health issues, it is likely to be more important than what is seen among the overall population of cereal users.
Introductions (Launch Type): Description of this image follows.
Description

Cereal Product Introductions in the United States by Launch Type - November 2010-October 2011: New Product 39%, New Packaging 36%, New Variety/Range/Extension 19%, New Formulation 3%, Relaunch 3%

Source: Mintel, 2012



MARKET OPPORTUNITIES

Retaining Key Markets (targeting those who currently report high consumption rates)

  • Given the high penetration of cereals in U.S. households, manufacturers need to be innovative to ensure they meet the evolving needs of their consumers. Linking whole grain products to health organizations, or to fitness/wellness programs through packaging and social media is becoming more common. Women, in particular, are more open to messaging around added attributes than to no/low claims. Shifting the promotion of sugary cereal consumption to suggest their use as a snack or a mix for other cereals may counter increasing concern over their link to childhood obesity. Cereals with better-for-you attributes will be of interest to Hispanic and Black consumers who have already shown interest in using cereals as part of a healthier diet. Research suggests that adults maintain a childhood connection to cereal, so there has been a move to reintroduce classic brands or repackage favourite brands featuring vintage designs. However, with decreasing numbers of children, there is a greater need to develop adult-oriented cereals that offer more sophisticated taste along with functional benefits. Credence attributes remain important. Organic has gone mainstream but kosher products and offerings with environmentally friendly packaging are gaining consumer interest (Mintel, 2012).

Extending the Market (targeting those who currently report mid-range to low consumption rates)

  • There is increasing competition from other breakfast options such as eggs, toast, fruit, breakfast bars, and yogurt, as well as from quick-serve restaurants that are putting more emphasis on breakfast menus. As a result, manufacturers are exploring more non-breakfast uses of cereals, as well as responding to the need for convenient and interesting options at the morning meal. To counter consumer attitudes that cereal is bland, "condiments" tailored to specific tastes or nutritional needs could be created to customize cereal. Manufacturers could also promote the use of cereal as a condiment for yogurts, ice cream, etc. Millenial eating patterns suggest that creating cereals that provide meal-sized portions and nutrition may be attractive for this on-the-go age group. This group is also the most likely to take cereal to work or school, so portability is an important issue. The fact that younger consumers are willing to expand their horizons beyond traditional milk may indicate an opportunity for cross-promotions with emerging cereal companions. Other sales channels, such as natural food stores and convenience stores may help attract increased consumption. Increased cereal costs may be having an impact on sales, particularly for smaller households. There is a need to enhance the value proposition for cereals. In addition to health and convenience messages, emphasizing servings per box, offering sample packs to allow customers to try cereals before buying bigger boxes, and contributions to social causes are suggested (Mintel, 2012).

KEY RESOURCES

  • Euromonitor International (2012)
  • Mintel Global New Products Database (2012).
  • Mintel, Breakfast Cereal, U.S. (February 2012).
  • The NPD Group. National Eating Trends database, for the year ending November 2010.
  • Statistics Canada (2012). .

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food Canada (2012).

The Government of Canada has prepared this report based onprimary and secondary sources of information. Although every effort has beenmade to ensure that the information is accurate, Agriculture and Agri-FoodCanada assumes no liability for any actions taken based on the informationcontained herein.

For more information, or to request additional copies or analternate format of this publication, please email infoservice@agr.gc.ca orcontact theInternational Markets Bureau - Agriculture and Agri-Food Canada, 1341Baseline Road, Tower 5,  4th floor, Ottawa, OntarioCanada  K1A 0C5

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