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Breakfast Cereals Market Report 2011
Key Note Publications Ltd, June 2011, Pages: 99
Breakfast cereals are an integral part of the British diet, and a key sector of the grocery market in the UK. The breakfast cereals market is made up of two main sectors: the ready-to-eat (RTE) sector, which consists of staples (including corn flakes and wheat biscuits), children’s, healthy and adult indulgence ranges; and the hot cereals sector, which consists of cereals that require some kind of preparation, such as porridge.
Since the Second World War, consumption of breakfast cereals has shown steady growth, although in 2008 the UK economy was hit by the recession, which saw the sale of breakfast cereals — alongside other food items — slow. Between 2006 and 2010, Key Note estimates that the entire breakfast cereals market grew by 15.6% in value terms, with particular growth demonstrated in the RTE cereal sector, which accounted for 91.2% of sales by value in 2010, compared with 90.9% in 2006. In addition, the consumption of hot cereals, which had been in long-term decline, has risen over the past 5 years. The cold weather experienced at the beginning and end of 2010, coupled with an awareness of the cholesterol-lowering properties of oats, has helped increase their popularity — though this sector is affected by seasonality, with consumption rates of hot cereals growing in colder months and falling in the spring and summer.
The breakfast cereals market is well established and has been dominated by three main companies — Kellogg, Weetabix and Cereal Partners (an alliance between Nestlé and General Mills) — for many years, as these companies are able to invest huge resources into marketing, building brands and new product development (NPD). Furthermore, due to supermarket discounts and buy-one-get-one-free (BOGOF) offers, the own-brand market saw value sales fall by 2.8% between 2009 and 2010, allowing popular brands to maintain their stronghold of the market, according to The Grocer. Owing to growing health concerns, particularly regarding child obesity levels, smaller companies have had considerable success in recent years targeting niche markets, such as organic, premium and gluten-/wheat-free products. However, the growth of alternative breakfast products, such as cereal bars and breakfast biscuits, poses a possible threat to the expansion of the breakfast cereals market, as busy modern lifestyles force consumers to search for even more convenient breakfast products.
Given its healthy image and the convenience of most products, the breakfast cereals market should continue to prosper in the long term. Breakfast cereal manufacturers have responded to criticism of their products by lowering sugar and salt content and reinforcing the positive image of the market with fortified and premium products. Although the impact of the recession continues to affect the UK economy, Key Note estimates that — although market growth in the breakfast cereals industry will slow — the market will grow by 15.2% in the next 5 years, as consumers continue to prioritise healthy eating.
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