Categories / Cereal
Category Insights: Breakfast Foods

Rise and Shine

PLBuyer takes a look at the private label products that make up what a new Mintel report says is a 19 percent share of breakfast foods sales, with dollar sales up 4.3 percent from 2011.

March 14, 2013
Trans

As National School Breakfast Week occurs this month (March 4-8), undoubtedly many parents will contemplate how important breakfast is for their children and themselves. According to the USDA, the School Breakfast Program gives more than 12 million children a well-balanced, healthy meal to start to the day. But for Americans eating breakfast at home, retailers will find breakfast foods are a big business, one that private labels have a strong foothold in.

Overall, the breakfast foods category has experienced solid growth during the recession, with a 20 percent increase in dollar sales from 2007-11, going from $10 billion in 2007 to $12 billion in 2011, according to a new report from Mintel Group Ltd. titled “Breakfast Foods – US, September 2012.” Furthermore the market is forecast to continue to grow by nearly 26 percent from 2012-17 to reach a predicted $15.7 billion.

The report shows that private label holds a 19 percent share of breakfast foods sales in food, drug, and mass channels (excluding Walmart). Kellogg is the leading national brand at 13 percent share, with Kraft Foods (8 percent) and Smithfield Foods (6 percent) further behind.

Dollar sales in private label breakfast foods rose 4.3 percent from 2011, and the report had praise for the retailers in charge of brands.

“Retailers need to continue to maintain product quality while innovating to meet consumer needs,” it said, “focusing on healthful options, but not compromising on taste, while maintaining a competitive price.”

“Like most categories, the retailers have done a good job being able to match or even exceed national brand quality,” said Bill Stewart, VP Sales & Marketing, Organic Milling LLC, San Dimas, Calif. “In 2011 there were some significant price increases due to the commodity cost increases that everyone with grains in their products experienced. That created a good opportunity in private label as well.”

HEALTHIER BREAKFASTS

“Breakfast is the most important meal of the day.”

Shoppers have heard the adage time after time, and studies have touted that breakfast provides everything from increased concentration to a healthy metabolism. But what shoppers and their children are eating for breakfast is just as important.

More than one-third of U.S. adults (35.7 percent) and approximately 17 percent (or 12.5 million) of children and adolescents aged 2-19 years are obese, according to the Centers for Disease Control and Prevention (CDC).

Although consumers strive to eat healthier, many may not know how to approach the issue. To this end, Mintel’s report suggests manufacturers and retailers consider becoming more involved in educating consumers on how to make better food choices. The report suggests partnering with dieticians, improving nutritional profiles, and providing food offerings that are intrinsically healthy, such as quinoa, chia seeds, and flaxseeds, as well as “power fruits” such as acai and pomegranate.

According to Stewart, interest in protein and fiber delivery isn’t going away and is important for private label cereals. Whole Foods Market addresses this exact need with its 365 Everyday Value Protein & Fiber Crunch Cereal.

Whole grain also continues to be a very important characteristic, Stewart adds. Under the same line, WFM’s Ancient Grains Hot Cereal covers a wealth of whole grains with kamut, spelt, oats and quinoa. The line also includes Organic Multigrain Waffles, and Organic Whole Wheat Pancakes or Mini Pancakes.

As far as inclusions of ingredients, Stewart says “super fruits” and such seem to be on the granola side.

“Cereal can be a delivery system for other products like probiotics. That should gain some traction,” Stewart said.

WFM and Wegmans both offer frozen waffles with flaxseeds included, while WFM also offers 365 Everyday Value Organic Flax & Honey Twigs Cereal.

Stewart also says he is seeing more interest in indulgent products such as chocolate, with a healthy, better-for-you grain component.

Outside of cereals and waffles, some other organic breakfast options available to shoppers include WFM 365 Everyday Value Organic French Toaster Sticks and Trader Joe’s Organic Frosted Toaster Pastries.

“I think the consumer is going to continue to ask for [organic products]; as long as the price doesn’t increase I think it’s going to continue to grow,” said Stewart.

In January, WFM added Engine 2 Plant-Strong products, a new line of plant-based items, to its stores. Developed in collaboration with Rip Esselstyn, author and founder of “The Engine 2 Diet,” the products adhere to the diet’s guidelines, which means they are lower in fat, contain minimal to no added sugar, never contain animal products or added oils and aim for a one-to-one sodium-to-calories ratio per serving.

Breakfast items in the line thus far include Engine 2 Plant-Strong Rip’s Big Bowl Cereal in Banana Walnut, Original, and Triple Berry flavors.

“Rip’s Big Bowl cereal brings together a bountiful blend of four wholesome whole grain cereals: rolled oats, shredded wheat, wheat berries, and sprouted grains nuggets,” the retailer writes on its website. “These core ingredients are topped off with the omega-3 all-stars: ground flaxseed and walnuts.”

Mintel’s report also showed gluten-free sales grew strongly; for the two most relevant segment – “frozen waffles and pancakes” and “pancake and waffle mixes” – gluten-free products grew 6.5 times faster than non-gluten-free items. Half of frozen waffles and pancakes and pancake and waffle mixes are gluten-free products. Mintel estimates that consumers without celiac disease or gluten intolerance are consuming gluten-free foods either to support family members or for weight loss.

Wegmans lists its private label Gluten-Free Frozen Waffles as new items on its website. The Wegmans Food You Feel Good About Gluten Free Homestyle Waffles or Blueberry Waffles also meet the dietary needs of vegans. Trader Joe’s markets its appeal to vegans right in the name of its Gluten & Dairy Free Homestyle Pancakes.

With all these products available, as Mintel suggests, retailers really need to take steps to educate the consumer on the healthiest options.

“The retailer is in a great position to educate consumer at point of sale,” Stewart said. He suggests using shoppers’ cards, smart phones and other technology to do so. “As long as they are really adding value, whether that’s nutritional information or how to get the best nutrition as possible.”

PACKAGING & MARKETING

Mintel’s report showed that many consumers continue to eat breakfast at restaurants on the weekend, and Mintel’s “Attitudes toward Healthy Food — U.S., June 2012,” found that 48 percent of consumer respondents would like to see more restaurant-like options. To this end, Mintel suggests breakfast food producers should consider offering more options that are currently popular on restaurant menus.

Stewart says that on-the-go instant oatmeal cups, such as national brand Quaker Real Medleys, and those from McDonalds and Starbucks, have had great success.

“That fits in with the overall trend towards convenience and portability in breakfast products,” Stewart said.

As a testament to its success, In January, Starbucks launched new Starbucks Hearty Blueberry Oatmeal, featuring steel-cut and rolled oats and new toppings including fresh blueberries, agave syrup, and a fruit, nut and seed medley.

“We know many people make wellness resolutions to kick-off the New Year and we’re excited to offer steel-cut oats and fresh fruit as part of our new oatmeal offering with Hearty Blueberry Oatmeal,” said Mary Wagner, Ph. D., senior vice president, research and development, Starbucks Coffee Company, in a press release. “Starbucks oatmeal has been a customer favorite since its launch in 2008 and we’re committed to continuing to innovate and provide selections that support a healthy lifestyle.”

In January, the retailer also rebranded its Perfect Oatmeal as Starbucks Classic Oatmeal and added the new steel-cut and rolled oats blend to it.

Drugstore retailer Duane Read touts DR Delish Original Steel Cut Oats as a new product on its website, describing the convenience product in a disposable bowl as “all-natural steel cut oats fully cooked in heavy cream with a whole egg added for protein then flavored with a touch of brown sugar and cinnamon.”

In the granola segment, Stewart said the stand-up resealable pouch has gotten a lot of traction and is a good way to showcase the product.

“I think it also leads to crossovers with cluster products that are more snack than cereal,” said Stewart. “I think from a packing perspective we’re seeing more fusion between cereal, snacks, cookies and crackers – they’re all coming together.”

To better promote private label products, Mintel’s report suggests retailers hold in-store tastings and cross-promote other private label products.

“For example,” the report said, “a retailer could provide a breakfast products flier filled with its private label offerings, not only with discounts, but recipe ideas that tout quality and versatility.”

“I’m a big believer in using the same types of merchandising tools the national brands are using,” Stewart said, “including free-standing displays and joint promotions with other related items, whether that’s milk or anything at all that provides value for the shopper.”

Mintel’s report predicts that private label is likely to continue to be a key player within the breakfast foods category, in thanks to a still sluggish economy and many product quality improvements that bring products common ground with national brands.

“While the majority of consumers do buy branded products for many of the segments, some consumers buy only private label, and many purchase a combination of the two,” stated the report.

 “It’s not a category that’s going to reinvent itself next year,” Stewart said concerning the cereal segment. “Cereal tends to be driven by innovation.”

 “PL will follow suit typically after a while once they see success on the branded side,” Stewart added.  

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