BREAKFAST LOVERS WANT TO HAVE IT ALL

November 5, 2010
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Supermarket breakfast aisles have been a tale of two tastes in recent days. On one side of the aisle, consumers worried about their health are looking for better-for-them offerings and see breakfast as the perfect meal for eating healthy.

On the other side, tough times and cutbacks in more indulgent pursuits such as eating out and traveling have prompted consumers to want to indulge themselves more when eating breakfast. Instead of that big breakfast, they might instead opt for a giant sticky bun – as disjointed as that might sound.

“Every trend has a polarizing trend,” notes Sean Seitzinger, senior vice president for SymphonyIRI Group and a quarterly columnist for PL Buyer. “So for everyone looking for health and wellness, there’s a consumer looking for indulgence.”
That breakfast preference tug-of-war is going on against a backdrop of quick-service restaurants (QSRs) increasingly competing for the shrinking pool of away-from-home breakfast dollars. The competition is putting more pressure on food retailers and their private label breakfast foods to exceed standards of quality and taste offered by both the restaurants and such name brand stalwarts as Jimmy Dean, Quaker Oats and Aunt Jemima.
“It used to be [private label] didn’t have to be great, it just had to be not bad. Those days are gone,” in breakfast offerings, says Rick Schultz, vice president of sales and marketing at SK Food Group, a Seattle-based maker of private label breakfast sandwiches.
Going forward, look for the growth rate of private label cereal to slow as brands increasingly compete by lowering prices through special promotions and other techniques, predicts Bill Patterson, senior market analyst with Mintel International. “We expect private label to continue to grow but just at a slower rate. Some consumers will go back to brands,” as the economy improves, he predicts.
Mintel research found that private label cereal sales saw only 4 percent growth in 2007; that rose to 9 percent in 2008 and then fell to 7 percent in 2009. “The increased rate of growth we had in private label the last couple of years was never likely to be sustainable,” Patterson says.
Data supplied to PL Buyer by SymphonyIRI bears out Patterson’s statement. Sales of both hot and cold cereals declined in the 52 weeks ending July 11, 2010. Hot cereal saw a 3.8 percent decline overall with private label hot cereal sales down slightly less at roughly a 3.1 percent drop. Private label dollar share in the category stood at 26.04 percent, up a scant 0.2 percent for the period.
On the cold cereal side, dollar sales fell 1.72 percent while private label dollar sales fell 4.24 percent and private label actually lost market share. That’s likely due to aggressive pricing by the major national brand players.
“General Mills and Kellogg have been very promotional based,” says Seitzinger. Major brands “have the tendency to go back to price when the category is soft.”

In at least one other breakfast category, prepared breakfast sandwiches, consumers expect at least a 30 percent better price on private label than on brands before they’ll switch, contends Schultz.

 

BEYOND CEREAL

Of course cereal is just the tip of the breakfast plate. In recent years, refrigerated breakfast treats have multiplied as have breakfast breads and muffins, often made by in-store bakeries.

In these areas of refrigerated/frozen and bakery, the contra-trends of health and indulgence are playing out in dramatic ways.
“The line between what is good for you and what is bad for you is becoming so blurred,” notes Patterson. Consumers view breakfast sausage, for example, as an indulgence and not something that’s necessarily good for them. Turkey sausage, on the other hand, is seen as a healthy alternative despite the other ingredients contained in it.
To appeal to the health-conscious, SK has rolled out natural breakfast sandwiches that are being introduced into Whole Foods. They also have a line of lean breakfast paninis with lower sodium content, about 720 milligrams, or half what other similar offerings carry, Schultz says.
In refrigerated breakfast sandwiches, until two years ago, there was very little private label, recalls Patterson. “Nothing competed with Aunt Jemima and Jimmy Dean,” he says.
But that’s changed with major chains moving their own private label offerings into the space. Indeed, SymphonyIRI’s Seitzinger says that an advantage retailers have with private label is that they can look at an entire range of breakfast offerings for consumers rather than just one category such as cereal or frozen entrées.
“What retailers really brought in the last five years was very much a more holistic approach to breakfast,” he says. “Traditionally manufacturers have had their own view of breakfast. Sara Lee [maker of Jimmy Dean] looked at it as a Jimmy Dean sausage. General Mills looked at it as a yogurt-based product [General Mills owns Yoplait]. I see the retailers doing a very good job of penetrating breakfast beyond just categories.”

Indeed, SymphonyIRI data show that private label refrigerated entrée dollar sales rose 5.41 percent in the 52 weeks ending July 11 even as the entire refrigerated entrée category saw growth of only 0.98 percent.

 

WHAT’S COOKING

Looking ahead, indulgence and health will continue to be twin themes that sell breakfast offerings. “The indulgent products will stay around. People are being told to be more healthy, they’re being told to cut down on the bad stuff in life, but on the other hand, there’ll always be a market for indulgence,” says Patterson. Some products will combine the two. Target’s Archer Farms brand Toffee Almond Crunch cereal, for example, has elements of both, he says. SuperValu offers a Wild Harvest brand organic date & cashew granola, another example of bringing healthy and indulgent together.
Lower fat, lower sodium products also will remain popular, Schultz predicts. He sees natural growing faster than organic because of price concerns about organic products. SK has a line of light breakfast sandwiches that include turkey sausage and bread made without trans fats, again bridging healthy and indulgent.

And back in the cereal aisle, Seitzinger advises retailers to think beyond price when trying to grab market share from the nationals. “Is all this focus on price really delivering what you want?” he asks retailers.

 

What the Competition is Doing

 

Breakfast has become a battleground and the major national brands want to not only hold their ground but gain more territory. Sara Lee’s Jimmy Dean brand, for example, is introducing a breakfast line aimed at children. The new Fresh Toast Griddles, Griddle Sticks and French Toast Duos retail for $4.99 and are being supported by TV, print, movie theater and online ads.

Quaker Oats, owned by PepsiCo., is rolling out two new oatmeal lines, including a kids product, and promoting its oatmeal with a national ad campaign featuring “The Biggest Loser’s” trainer Bob Harper.

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