Weetabix identifies factors for significant breakfast cereal market growth in its second annual report
The Weetabix Food Company has launched its second annual report with a strong focus on the issues in the current grocery market; sustainability and the environment. There is a clear message that today's breakfast cereal manufacturers have to deal with these issues and meet significant consumer demand, often created through media exposure, and multiple retailer concerns.
 On top of this the market is in healthy development with a value growth of 8% YOY from £1.4bn to 1.6bn; a 5% increase on the previous 12 months. This growth is largely attributed to innovation, which accounts for 50% of the total market growth, coupled with strong brand performances.
Sustainability and the environment
More and more consumers are interested in the source of their food and multiple retailers are putting pressure on manufacturers to be accountable for the supply of the raw materials. Weetabix highlights the fact that all its wheat is sourced from the UK and 90% within a 50 mile radius of the factory in Northamptonshire.
The report identifies "local" as an engaging proposition as it appears to have all the elements the consumer looks for. The concept is strongly linked to quality and freshness and the feeling that the producer is supporting the local community in terms of the farmer/grower, and it reduces food miles lessening carbon footprint.
Other key findings
Surprisingly, the hot sector has fallen into decline after a period of sustained and rapid growth. It is suspected that successive warmer winters have made a contribution but the emergence of the cold oat sector, as a direct contender to hot cereals, has made its mark. Oatibix is a clear winner in the stakes being responsible for 30% of the total category growth.
New product development consistently drives growth in the market and Oatibix, Oatibix Bitesize and Oatiflakes have become a force to be reckoned with as health and well-being remain a significant driver in the sector.
The cereal bar market is a reflection of the pace of life today, showing value growth of 10.2% as more consumers look for snacking solutions on the go. It is by far the most diverse sector as biscuit and confectionary manufacturers play a significant part in the market.
Alpen is changing too with the range expanding into High Fruit and Nut Crunch. With consumers interested in more exotic fruit based combinations and indulgent options, such as granola, this is paving the way to meet the demand for more premium cereals.
Ken Wood, Chief Executive Officer at the Weetabix Food Company, acknowledged "the challenge that all manufacturers face is how to create the appropriate conditions for continued business growth, whether that relates to existing brands or successful new innovations that drive category growth.
"We also recognise how important the sustainability issue is today. I believe there is an onus on all of us to play a part in promoting sustainability and helping to maintain both a healthy nation and planet for future generations."
Significant cereal facts
The report highlights 10 key points about the market which indicate the direction the sector is taking:
¥ Market growth is at 8% and makes the breakfast cereals market the fastest growing category within the total grocery market
¥ The market is growing in terms of volume and value growth - not usually the case in such a mature market. This is driven by three factors:
¥ Strong performance by Weetabix, Special K and Crunchy Nut Cornflakes
¥ Strong NPD programmes from all manufacturers
¥ Consistent retail price inflation reflecting changing cost pressures
¥ Innovation alone has contributed more than 50% of total growth, with cold oats as a new category already commanding 6% of the total cereal market
¥ Weetabix has overtaken Cereal Partners to take number two position behind Kellogg's, as Shredded Wheat sees volume erosion and Fitnesse has declined 29% year on year
¥ The top 4 multiples account for nearly 80% of all cereal sales, demonstrating that it is usually part of the weekly shop and rarely an emergency purchase
¥ Advertising expenditure in the cereal and bar market has reached an all time high at £117m expenditure, up £22m on the previous year - TV accounts for 82%
¥ The hot cereal market is in decline due to climatic changes and the emergence of the cold oat market
¥ RTE cereals are now valued at £1.2bn showing growth of 9%
¥ Cereal bars are now valued at £287m, up 10.2%
¥ Despite new restrictions on advertising to children, sales continue to grow with Coco Pops showing a 14.2% value growth through the introduction of several new variants in the past 12 months
* All data sourced from ACNielsen
If your readers would like a copy of the Breakfast Cereal and Cereal Bar market report 2007 please call Weetabix Customer Services.
www.weetabix.co.uk
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