The U.S. Breakfast Market: Cereals
Jan 1, 2001
218 Pages - Pub ID: LA597
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  1. Executive Summary
    • Scope and Methodology
    • The Scope of This Report
    • Report Methodology
    • The Products
    • Two Breakfast Cereal Categories: Hot and Cold
    • Three Cold Cereal Types: Sweetened, Natural, and Regular
    • Hot Cereals Are Either Regular or Instant
    • Other Ways of Classifying Breakfast Cereals
    • The Market
    • Breakfast Cereals in Rally to $9.7 Billion in 2000
    • Cold Cereals in Push to $8.8 Billion
    • Hot Cereals Truly Hot, at $919 Million
    • Table 1-1: U.S. Retail Dollar Sales of Breakfast Cereals, by Category, 1995-2005
    • Breakfast Cereals Push to $11.5 Billion in 2005
    • Cold Cereals to Reach $10.4 Billion
    • Figure 1-1: U.S. Retail Dollar Sales of Breakfast Cereals, by Category, 1995-2005 (dollars): Cold (R-T-E), Hot
    • Hot Cereals in Steady Growth to $1.1 Billion
    • Basic Nutrition, Plus...
    • Convenient—But Not Convenient Enough
    • New Health Claims Allowed
    • Kids Are an Evergreen Audience
    • Supermarkets Losing Share to Mass Merchandisers
    • Table 1-2: Share of U.S. Retail Dollar Sales of Breakfast Cereals, by Channel, 1995-2000 (percent): Supermarkets, Mass Merchandisers, Drugstores, Other Outlets
    • The Marketers
    • Six Major Marketers
    • In Cold Cereals, General Mills Edges Out Kellogg
    • Quaker Has Rock Solid Command of Hot Cereals
    • A Game of Intense Marketing and New Product Development
    • The Price Pressure
    • A Strong Trend: Cross-Positioning to Multiple Audiences
    • Ad Spending at $769 Million in 1999
    • Six Million-Dollar Ad Spenders
    • Much Cold Cereal Is Sold "On Deal
    • A Sophisticated Array of Promotions
    • Distribution and Retail
    • The Classic Four-Step Path, Plus DSD
    • Supermarkets Dominate Cereal Scene
    • Retail Margins Narrowing
    • The Consumer
    • Almost 99 Million Purchase Cold Cereals for Their Households
    • No Demographics Stand out in Overall Cold Cereal Purchase/Use
    • Over Half of Decision-Makers Cite Heavy Cold Cereal Consumption
    • Nearly 71 Million Purchase Hot Cereals
    • Older Folks, African Americans Mark Hot Cereals Use
    • Heavy Use of Hot Cereals Dominates
  2. The Products
    • Introduction
    • Scope of This Report
    • Clarification of Terms
    • Supermarket
    • Market/Category/Segment
    • The Products
    • Definition of the Word "Cereal"
    • Cereal Grains
    • Other Ingredients
    • Breakfast Cereal Manufacturing Processes
    • Granolas and Mueslis
    • "Enriched" versus "Fortified" versus "Nutraceutical"
    • Two Breakfast Cereal Categories: Hot and Cold
    • Three Cold Cereal Types: Sweetened, Natural, and Regular
    • Hot Cereals Are either Regular or Instant
    • Other Ways of Classifying Breakfast Cereals
    • Semi-Naturals
    • Packaging
    • Freshness Dating
    • Regulation
    • Agencies Involved
    • United States Department of Agriculture (USDA)
    • The Food and Drug Administration (FDA)
    • The Federal Trade Commission (FTC)
    • The Nutrition Labeling and Education Act of 1994
    • The FDA's 11 Permissible "Relationship" Claims
  3. The Market
    • Market Size and Growth
    • Breakfast Cereals in Rally to $9.7 Billion in 2000
    • Table 3-1: U.S. Retail Dollar Sales of Breakfast Cereals, by Category, 1995-2000 (dollars): Cold (R-T-E), Hot
    • Figure 3-1: U.S. Retail Dollar Sales of Breakfast Cereals, by Category, 1995-2005 (dollars): Cold (R-T-E), Hot
    • Cold Cereals in Push to $8.8 Billion
    • Hot Cereals Truly Hot, at $919 Million
    • A Mature Market Stimulated by Healthier Products, Retail Channel Strategies
    • Sales Growth Dampened by High Prices, Breakfast Alternatives
    • Cereal Volume Rises to 3.5 Billion Pounds
    • Cold Cereal Volume Restored to 3.1 Billion Pounds
    • Hot Cereal Volume Climbs to 434 Million Pounds
    • Table 3-2: U.S. Pound Sales of Breakfast Cereals, by Category, 1997-2000 (pound): Cold (R-T-E), Hot
    • Average Price Still Climbing
    • Table 3-3: U.S. Average Retail Price of Breakfast Cereals, by Category, 1997-2000 (dollars): Cold (R-T-E), Hot
    • Factors in Future Growth
    • Basic Nutrition, Plus..
    • Convenient—But Not Convenient Enough
    • New Health Claims Allowed
    • Kids Are an Evergreen Audience
    • Table 3-4: Projected U.S. Births, 2000-2010 (number)
    • A Trend to Some Indulgence in Eating
    • The Advent of Barley Cereals
    • The Issue of High Price
    • Boomers Are Feeling Old
    • Table 3-5: Projection of U.S. Population by Age, 2000-2010 (number): 6 age brackets
    • The Grain Supply—Minimal Effect on Price
    • Projected Sales
    • Breakfast Cereals Push to $11.5 Billion in 2005
    • Cold Cereals to Reach $10.4 Billion
    • Hot Cereals in Steady Growth to $1.1 Billion
    • Table 3-6: Projected U.S. Retail Dollar Sales of Breakfast Cereals, by Category, 2000-2005 (dollars): Cold (R-T-E), Hot
    • Market Composition: By Product
    • Cold Cereals Losing Share to Hot
    • Table 3-7: Share of U.S. Retail Dollar Sales of Breakfast Cereals, by Category, 1995-2000 (percent): Cold (R-T-E), Hot
    • Market Composition: By Outlet
    • Supermarkets Losing Share to Mass Merchandisers
    • Supermarkets Lose Cold Cereal Dollars
    • Supermarkets Manage to Swell Hot Cereal Share
    • Table 3-8: Share of U.S. Retail Dollar Sales of Breakfast Cereals, by Channel, 1995-2000 (percent): Supermarkets, Mass Merchandisers, Drugstores, Other Outlets
    • Market Composition: Regionality
    • Special Note on Simmons Regionality Data
    • South Leads in Cold Cereal Sales
    • Table 3-9: Household Use of Cold (R-T-E) Breakfast Cereals, by Census Region, 1999 (number and percent): South, Midwest, West, Northeast
    • Cold Cereal Regionality, by Product Type
    • Regular
    • Sweetened
    • Natural
    • Table 3-10: Household Use of Cold Breakfast Cereal Types, by Census Region, 1999 (number and percent): Regular, Sweetened, Natural; South, Midwest, West, Northeast
    • South Also Leads in Hot Cereal Sales
    • Table 3-11: Household Use of Hot (R-T-E) Breakfast Cereals, by Census Region, 1999 (number and percent): South, Midwest, West, Northeast
  4. The Marketers
    • The Marketers
    • Six Major Marketers
    • A Few Hundred Other Marketers
    • Further Consolidation Is Possible
    • Types of Companies Involved
    • Table of Breakfast Cereal Marketers and Their Brands
    • Table 4-1: Leading Breakfast Cereal Marketers and Their Brands, by Type and Target Audience, 2000 (listing): 16 marketers, 163 brands
    • Marketer Shares
    • Special Note about IRI Data
    • In Cold Cereals, General Mills Edges Out Kellogg
    • Table 4-2: Share of U.S. Retail Sales of Cold (R-T-E) Breakfast Cereals, by Marketer and Brand, 1998-2000 (percent): General Mills, Inc., Kellogg Company, Philip Morris Cos., The Quaker Oats Company, All Other Brands, Private Label; 52 brands
    • Quaker Has Rock Solid Command of Hot Cereals
    • Table 4-3: Share of U.S. Retail Sales of Hot Breakfast Cereals, by Marketer and Brand, 1998-2000 (percent); The Quaker Oats Company, Nabisco, Inc., Malt-O-Meal, Ralston Foods; 9 brands, All Other Brands, Private Label
    • The Competitive Situation
    • A Game of Intense Marketing and New Product Development
    • The Price Pressure
    • The Weak Alternative Scene
    • Consolidation
    • Competitive Profile: General Mills, Inc.
    • A $6.7 Billion Company
    • Six Current Business Segments
    • A Pending Merger with Pillsbury
    • The Right Mix of Extensions and New Brands
    • General Mills' Bold Organic Move
    • A Joint Venture with Nestle
    • The Big G Becomes a Research Powerhouse
    • Other Big G Brands
    • Competitive Profile: The Hain Celestial Group, Inc
    • A New Company with Net Sales of $404 Million
    • Hain Celestial's Unique Stance in Multiple Retail Channels
    • Other Hain Celestial Brands
    • Competitive Profile: Kellogg Company
    • Net Sales Revive to More Than $7 Billion
    • Kellogg Trims Trade Promos, Loses Top Spot
    • Kellogg's Missteps in New Product Development
    • What Kellogg Intends to Do Now
    • Frosted Flakes Still a Good Performer
    • Kellogg's New Structure-Function Claims
    • Other Kellogg Products
    • Competitive Profile: Malt-O-Meal Company
    • Sales of Perhaps $350 Million
    • A Brief History
    • A Cereal Specialist with a Value Stance
    • Malt-O-Meal Still Strongest in Midwest
    • Competitive Profile: The Philip Morris Companies, Inc
    • Operating Revenues Estimated at $81.5 Billion in 2000
    • Four Business Segments
    • Keeping the Blue-Chip Post Franchise Modern
    • Philip Morris' Acquisition of Nabisco Merely a Follow-Through
    • Other Philip Morris Labels
    • Competitive Profile: The Quaker Oats Company
    • Net Sales Expected to Rebound in 2000
    • Food and Gatorade Segments now Combined
    • Quaker's Cholesterol-Reduction Coup
    • Quaker Innovates to Create a Second Sales Wave
    • PepsiCo Announces Purchase of Quaker
    • A Specialty Market for Quisp
    • Other Quaker Brands
    • Marketing Trends
    • Cross-Positioning to Multiple Audiences
    • Accommodation of the Health Conscious
    • Looking to Other Product Markets—and Vice Versa
    • Product Trends
    • Lots More of the Same
    • Lots More of Healthful SKUs
    • "Semi-Naturals
    • Flavored Instant Hot Cereals
    • Promotional/Seasonal SKUs
    • Table 4-4: Selected New Product Introductions, 1998-2000 (listing): 25 marketers, 57 brands
    • Consumer Advertising Expenditures
    • Ad Spending at $769 Million in 1999
    • Six Million-Dollar Spenders
    • General Mills Spends a Colossal $357 Million
    • Kellogg Trims Spending to $169 Million
    • Philip Morris Allocates $138 Million
    • Quaker Pumps Ad Budget to $98 Million
    • Nabisco Spends $6 Million
    • Malt-O-Meal Drops Media Buys to $1.3 Million
    • Other Spenders
    • Consumer Advertising Positioning
    • Taste
    • Healthfulness
    • Increased Cross-Positioning Between Adult, Kid, and Family Audiences
    • Nostalgia
    • Resurrecting Mikey
    • Energy
    • Weight Loss
    • The Semi-Naturals
    • Product Placement in Television Shows
    • Consumer Promotions
    • Much Cold Cereal Is Sold "On Deal"
    • A Sophisticated Array of Promotions
    • Coupons
    • Table 4-5: Share of Consumer Dollars Spent to Take Advantage of Marketers' or Retailers' Special Promotions, 1998 (percent): 10 products
    • Marketer-Labeled Price Specials
    • In-Pack Premiums
    • Merchandise Offers and Tie-Ins
    • Free Air Miles
    • Some Use of Sweepstakes, Entertainment Tie-Ins, Celebrities
    • A Bible Promotion Stopped
    • American Heart Month and National School Breakfast Week
  5. Distribution And Retail
    • Distribution
    • The Classic Four-Step Path, Plus DSD
    • Marketers' Category Management and ECR
    • Transora.com Formed to Streamline the Packaged Foods Path
    • At the Retail Level
    • Supermarkets Dominate Cereal Scene
    • Retail Margins Narrowing
    • Table 5-1: Retailers' Average Gross Profit Margins on Breakfast Cereals, 1995-1999 (percent): cold cereals, hot cereals, grits
    • Where Shelved
    • Assortment
    • Product Mixes: Sweetened Often Dominates
    • Retailers Boutiquing Breakfast Alternatives in Cereal Aisles
    • Marketers Cater to Drug Channel
    • Webvan: An E-tailer Allies with Fleming and SuperValu
    • Retailers Bank on Private Label
  6. The Consumer
    • The Consumer of Cold Breakfast Cereals
    • The Simmons Consumer Survey
    • Almost 99 Million Purchase Cold Cereals for Their Households
    • No Demographics Stand out in Overall Cold Cereal Purchase/Use
    • Over Half of Users Cite Heavy Cold Cereal Consumption
    • Figure 6-1: Household Level of Consumption of Cold (R-T-E) Breakfast Cereals, 1999 (percent): Heavy, Medium, Light
    • Women Decide the Majority of Cold Cereal Purchases
    • Table 6-1: Level of Household Consumption of Cold (R-T-E) Breakfast Cereals, by Gender of Decision-Maker, 1999 (number and percent): Heavy, Medium, Light
    • A Family Profile for Heavy Consumers of Cold Cereals
    • Table 6-2: Demographic Factors Favoring Use of Cold (R-T-E) Breakfast Cereals, by Number of Portions Used by Household During Previous Week (listing): Any, Heavy, Medium, Light; 12 Factors
    • Regular and Sweetened Types Are Most Popular
    • Table 6-3: Household Consumption of Cold (R-T-E) Breakfast Cereals, by Type of Cereal and by Gender, 1999 (number and percent): Regular, Sweetened, Natural
    • Age, Occupation, Income Distinguish Cold Cereal Types
    • Table 6-4: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Type, 1999 (listing): Regular, Sweetened, Natural; 12 factors
    • The Sole Type User Skews Senior
    • Table 6-5: Demographic Factors Favoring Sole Type Household Use of Cold (R-T-E) Breakfast (listing): 12 factors
    • Cheerios, Kellogg's Corn Flakes, Kellogg's Frosted Flakes Lead in Popularity
    • Sole versus Primary Brand Use
    • Table 6-6: Cold (R-T-E) Breakfast Cereal Purchase, by Brand, 1999 (number and percent): 22 brands, private label, sole brand user, primary brand user
    • Key Factors Marking Cold Cereal Brand Use
    • Age
    • Marital Status
    • Children
    • Education, Occupation, Income
    • Table 6-7a: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Brand, 1999 (listing): Cap'n Crunch (Plain), Cheerios, Apple Cinnamon Cheerios, Frosted Cheerios; 12 factors
    • Table 6-7b: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Brand, 1999 (listing): Honey Nut Cheerios, Cocoa Puffs, Golden Grahams, Kellogg's Apple Jacks; 12 factors
    • Table 6-7c: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Brand, 1999 (listing): Kellogg's Corn Flakes, Kellogg's Corn Pops, Kellogg's Frosted Flakes, Kellogg's Frosted Mini Wheats ; 12 factors
    • Table 6-7d: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Brand, 1999 (listing): Kellogg's Froot Loops, Kellogg's Raisin Bran, Kellogg's Rice Krispies, Kellogg's Special K; 12 factors
    • Table 6-7e: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Brand, 1999 (listing): Lucky Charms, Nabisco Spoon Size Shredded Wheat, Post Grape-Nuts, Post Honeycomb; 12 factors
    • Table 6-7f: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Brand, 1999 (listing): Post Raisin Bran, Wheaties, Private Label; 12 factors Factors in Sole versus Primary Cold Cereal Brand Use
    • Table 6-8: Demographic Factors Favoring Household Use of Cold (R-T-E) Breakfast Cereals, by Sole and Primary Brand Use, 1999 (listing): Sole Brand Use, Primary Brand Use; 12 factors
    • The Consumer of Hot Breakfast Cereals
    • Nearly 71 Million Purchase Hot Cereals
    • Older Folks, African Americans Mark Hot Cereals Use
    • Heavy Use of Hot Cereals Dominates
    • Table 6-9: Demographic Factors Favoring Household Use of Hot Breakfast Cereals, 1999 (listing): 12 factors
    • Figure 6-2: Household Level of Consumption of Hot Breakfast Cereals, 1999 (percent): Heavy, Medium, Light
    • Table 6-10: Level of Household Consumption of Hot Breakfast Cereals, by Gender of Decision-Maker, 1999 (number and percent): All, Heavy, Medium, Light Seniors, Low Incomes Featured in Heavy and Medium Use
    • Light Users of Hot Cereals Well Educated and Prosperous
    • Table 6-11: Demographic Factors Favoring Use of Hot Breakfast Cereals, by Number of Portions Used During Previous Week, 1999 (listing): Any, Heavy, Medium, Light; 12 factors
    • Quaker Instant Oatmeal Is the Most Popular Hot Cereal
    • Table 6-12: Hot Breakfast Cereal Purchase, by Brand, 1999 (number and percent): 7 brands
    • Hot Cereal Brand Use: Older Age Groups, Family Situations, Less Affluence
    • Table 6-13a: Demographic Factors Favoring Household Use of Hot Breakfast Cereals, by Brand Used Most Often, 1999 (listing): Aunt Jemima Grits, H.O. Instant Oatmeal, Malt-O-Meal, Nabisco Cream of Wheat; 12 factors
    • Table 6-13b: Demographic Factors Favoring Household Use of Hot Breakfast Cereals, by Brand Used Most Often, 1999 (listing): Quaker Instant Oatmeal, Old Fashioned Quaker Oats, Quaker Grits; 12 factors

    Appendix I: Examples Of Consumer And Trade Advertising And Promotions
    Appendix II: Addresses Of Selected Marketers
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