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Breakfast Cereals - UK - August 2017

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Struggles of RTE cereals segment bring down the entire market 2012-17
RTE cereals’ weakness to continue to overshadow the category 2017-22
Figure 1: UK retail value sales of breakfast cereals, 2012-22
‘Official’ movement against sugar poses challenges and opportunities
New government health advice looks to boost fibre consumption
Breakfast cereals could benefit from an income squeeze
Ageing population to affect RTE and hot cereals differently
Companies and brands
Kellogg’s brands continue to struggle while own-label rises
Figure 2: Leading manufacturers’ shares in the UK RTE cereals market, by value, 2016/17*
Quaker retains leading position in hot cereals but loses sales
Launch activity falls in 2016
L/N/R sugar claims rise but remain niche
Brands focus on emotions in their 2016/17 advertising
Weetabix and Quaker Oat So Simple enjoy strong reputations
The consumer
RTE cereals have high penetration, but only a minority eat them daily
Figure 3: Usage of breakfast cereals, June 2017
Little brand loyalty, with price promotions a key influence
Figure 4: Breakfast cereal buying habits, June 2017
Fractured breakfast eating patterns erode breakfast occasions
Figure 5: Breakfast cereal eating and buying behaviours, June 2017
Ingredients with ‘natural’ image appeal most as sugar substitutes
Figure 6: Preferred alternatives to sugar, June 2017
Breakfast cereals can benefit from an income squeeze
Figure 7: Attitudes towards breakfast cereals, June 2017
What we think
ISSUES AND INSIGHTS
Extension of portable formats needed to respond to fragmented breakfast eating patterns
The facts
The implications
Healthy children’s cereals with appealing packaging could help to win back lapsed users
The facts
The implications
Daily intake labelling would make high-fibre claims more tangible
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Struggles of RTE cereals segment bring down the entire market 2012-16
Further volume decline in 2017
RTE cereals’ weakness to continue to overshadow the category 2017-22
‘Official’ movement against sugar poses challenges and opportunities
New government health advice looks to boost fibre consumption
Breakfast cereals could benefit from an income squeeze
Ageing population to affect RTE and hot cereals differently
MARKET SIZE, SEGMENTATION AND FORECAST
Ongoing decline in RTE cereals brings down the entire market 2012-17
Weakness of RTE cereals to continue to hinder the category 2017-22
Figure 8: UK retail sales of breakfast cereals, by value and volume, 2012-22
Figure 9: UK retail value sales of breakfast cereals, 2012-22
Further decline for RTE cereals in 2016/17
No recovery in volume sales imminent
Diverse factors will affect RTE cereals over 2017-22
Weakness of volume sales and trading down to slow value growth
Figure 10: UK retail sales of RTE cereals, by value and volume, 2012-22
Figure 11: UK retail value sales of RTE cereals, 2012-22
Modest growth in hot cereal volume sales in 2016
Volume sales growth stalls in 2017
Ageing population to support hot cereals 2017-22
Figure 12: UK retail sales of hot cereals, by value and volume, 2012-22
Figure 13: UK retail value sales of hot cereals, 2012-22
Forecast methodology
MARKET DRIVERS
‘Official’ movement against sugar provides challenges and opportunities
Government sets industry targets to cut sugar
EFSA rules put low sugar limit at 5g per 100g
PHE targets parents with breakfast campaign
Liverpool Council ‘names and shames’ children’s cereals
New government health advice looks to boost fibre consumption
Inflation to affect the market
Breakfast cereals could benefit from an income squeeze
New rules ban online advertising of sugary products to children
Ageing population to affect RTE and hot cereals differently
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Kellogg’s brands continue to struggle while own-label rises
Quaker retains leading position in hot cereals but loses sales
Launch activity falls in 2016
L/N/R sugar claims rise but remain niche
Brands focus on emotions in their 2016/17 advertising
Weetabix and Quaker Oat So Simple enjoy strong reputations
MARKET SHARE
Kellogg’s brands continue to struggle
Figure 14: Leading brands’ sales and shares in the UK RTE cereals market, by value and volume, 2015/16-2016/17
Figure 15: Leading manufacturers’ sales and shares in the UK RTE cereals market, by value and volume, 2015/16-2016/17
NPD and aisle redesigns help own-label to grow sales
Supermarkets continue to compete on price
Weetabix Minis outperforms the standard variant
Quaker continues to lead on hot cereals but loses sales
Figure 16: Leading brands’ sales and shares in the UK hot cereals market, by value and volume, 2015/16-2016/17
Figure 17: Leading manufacturers’ sales and shares in the UK hot cereals market, by value and volume, 2015/16-2016/17
LAUNCH ACTIVITY AND INNOVATION
Launch activity declines in 2016
Figure 18: New product launches in the UK breakfast cereals market, by private label and brands, 2013-17
High/added fibre remains the primary health claim
Wholegrain made central to high-fibre claims
Multiple health claims used to give additional differentiation
Quaker emphasizes the vitamin content of its Super Goodness range
Further growth in high fibre and L/N/R sugar cereals
Figure 19: New product launches in the UK breakfast cereals market, by top 20 claims (sorted by 2016), 2013-17
L/N/R sugar claims rise in 2016
Brands and retailers reformulate
Growth in gluten-free launches drives rise in L/N/R allergy claims
Smaller brands and retailers lead the way
Kellogg’s maintains its lead on NPD in 2016
Extensions to Coco Pops and Crunchy Nut ranges in 2017
Quaker ups NPD activity, with a focus on convenience
Pouched product promoted as good for eating on the go
Overnight Oats allows potential for summertime eating
Oat So Simple gets high-protein variant
Weetabix focuses on provenance with limited-edition packaging
ADVERTISING AND MARKETING ACTIVITY
Advertising spend falls to four-year low in 2016
Kellogg’s and Nestlé continue to dominate advertising
Figure 20: Total above-the line, online display and direct mail advertising expenditure on breakfast cereals, by top 5 advertisers (sorted by 2016), 2013-17
Brands focus on strength to build aspirational image
Special K takes holistic approach to health in female-orientated campaign
Shredded Wheat links its wholegrain attributes with courage
Quaker Oats recruits Buzz Aldrin to push achievement message
Weetabix revives its ‘Have you had your Weetabix?’ slogan
Social aspects of breakfast emphasized to strengthen emotional associations
Kellogg’s links Cornflakes with individuality and family banter
Cheerios emphasizes the importance of family breakfasts
Coco Pops looks to appeal to time-pressed and health-conscious parents
Other Kellogg’s campaigns
Special K emphasizes taste as well as health to widen its appeal…
…and looks to address sugar concerns
Crunchy Nut launches challenge competition
Multi-brand YouTube campaign looks to find new occasions
Alpen advert uses Swiss imagery to emphasise traditional recipe
Nestlé and Quaker offer tasting opportunities
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 21: Attitudes towards and usage of selected brands, June 2017
Key brand metrics
Figure 22: Key metrics for selected brands, June 2017
Brand attitudes: Weetabix and Quaker Oat So Simple have the best reputations
Figure 23: Attitudes, by brand, June 2017
Brand personality: Coco Pops and Crunchy Nut are seen as the most fun
Figure 24: Brand personality – Macro image, June 2017
Weetabix and Quaker Oat So Simple are seen as the most traditional
Figure 25: Brand personality – Micro image, June 2017
Brand analysis
Quaker Oat So Simple is seen as the most comforting
Figure 26: User profile of Oat So Simple, June 2017
Weetabix is the most recommended brand
Figure 27: User profile of Weetabix, June 2017
Crunchy Nut scores highest for taste
Figure 28: User profile of Crunchy Nut, June 2017
Dorset Cereals is seen as the most ethical brand
Figure 29: User profile of Dorset Cereals, June 2017
Special K is held in high esteem by women
Figure 30: User profile of Special K, June 2017
Coco Pops is seen as the most fun
Figure 31: User profile of Coco Pops, June 2017
Shredded Wheat is favoured by men
Figure 32: User profile of Shredded Wheat, June 2017
THE CONSUMER – WHAT YOU NEED TO KNOW
RTE cereals have high penetration, but only a minority eat daily
Little brand loyalty, with price promotions a key influence
Fractured breakfast eating patterns erode breakfast occasions
Ingredients with ‘natural’ image appeal most as sugar substitutes
Further information on grain sourcing appeals to many
USAGE OF BREAKFAST CEREALS
Overall usage of RTE cereals is unchanged
Figure 33: Usage of breakfast cereals, June 2017
Under-25s are key users of RTE cereals
…as are families
Figure 34: Usage frequency for RTE cereals and porridge oats, June 2017
Porridge oats are favoured by older consumers
Oats’ healthy image and satiety associations boost popularity among women
BREAKFAST CEREAL BUYING FACTORS
Consumers’ desire for variety and retailer tactics fuel low brand loyalty
Over-55s are the most loyal
Figure 35: Breakfast cereal buying habits, June 2017
Free samples are a key enticement
Figure 36: Prompts to try a new brand of cereal, June 2017
Link-ups with supermarket loyalty schemes could help to harness the power of discounts
Prices and promotions have a strong influence on brand switching
Figure 37: Factors influencing choice of breakfast cereal, June 2017
Older people are particularly likely to value no added sugar
Appeal of no added sugar labels benefits certain varieties
Interest in high fibre should support wholegrain cereals
One third do not check nutritional tables
Daily intake labelling could help to make fibre claims more tangible
New flavours appeal particularly to younger consumers
BREAKFAST CEREAL EATING AND BUYING BEHAVIOURS
Fragmented eating patterns reduce breakfast occasions
Figure 38: Breakfast cereal eating and buying behaviours, June 2017
Promoting breakfast’s importance could help to combat breakfast skipping
Expansion in handheld formats should help companies to respond to the ‘snackification’ of breakfast
Sweet snacks from cereal brands appeal to many
Harnessing pester power proves a double-edged sword for companies
Healthy children’s cereals with appealing packaging could help to win back lapsed users
Media reports on ‘shrinkflation’ influence consumers’ behaviour
Transparency could stave off potential backlash
PREFERRED ALTERNATIVES TO SUGAR
Honey’s natural health halo boosts its appeal
Figure 39: Preferred alternatives to sugar, June 2017
Dried fruit’s appeal should boost no added sugar mueslis
Consumer health concerns and unfamiliarity limit appeal of sweeteners
Appeal of less sweet-tasting products offers opportunities for manufacturers
ATTITUDES TOWARDS BREAKFAST CEREALS
Breakfast cereals could benefit from an income squeeze
Figure 40: Attitudes towards breakfast cereals, June 2017
Further details on grain origin would be welcomed by many
Smaller brands should be best placed to benefit from consumer interest in provenance
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 41: Forecast of UK sales of breakfast cereals, by value, best- and worst-case, 2017-22
Figure 42: Forecast of UK sales of breakfast cereals, by volume, best- and worst-case, 2016-21
Figure 43: Forecast of UK sales of RTE cereals, by value, best- and worst-case, 2017-22
Figure 44: Forecast of UK sales of RTE cereals, by volume, best- and worst-case, 2017-22
Figure 45: Forecast of UK sales of hot cereals, by value, best- and worst-case, 2017-22
Figure 46: Forecast of UK sales of hot cereals, by volume, best- and worst-case, 2017-22
Figure 47: UK retail volume sales of breakfast cereals, 2012-22
Figure 48: UK retail volume sales for RTE cereals, 2012-22
Figure 49: UK retail volume sales of hot cereals, 2012-22
Forecast methodology
APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 50: New product launches in the UK breakfast cereals market, by top ten companies (sorted by 2016, 2013-16

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