Rabobank says that despite the trends reshaping the American breakfast meal, it sees continued strong potential in the U.S. breakfast cereal market.  Fereday offers several strategies for breakfast cereal companies to grow their U.S. business and take advantage of trends currently undercutting their market.

Innovation

Among the possible strategies cereal companies have to lure in breakfast skippers are innovation and targeted marketing that emphasizes the importance of breakfast as the most important meal:

• Renew the focus on innovation:  Make bigger and better bets to generate new brand platforms, such as Kraft has done with Mio, Oscar Mayer Selects and Velveeta Skillets.

• Spend more on food ingredients relative to advertising budgets, learning from the success of fast growing companies such as Clif Bar & Company, Chipotle Mexican Grill, Inc., and Whole Foods Markets, Inc., that food does not have to be a least-cost formulation.

Reboot the Consumer Message

The breakfast cereal category pioneered marketing in the age of mass media, but Rabobank says it is struggling to find its voice and target customers in today’s age of multimedia and fragmented retail channels.  Equally, many current consumer food trends do not necessarily play well to cereal’s core strengths, as consumers move away from highly processed foods. Nevertheless, Rabobank believes breakfast cereals remain a highly relevant platform for delivering many health and wellness positives, but that manufacturers need to reboot their message to consumers regarding the relevance of their product.

Fereday concludes, “Despite the numerous health positives associated with breakfast cereal, some companies already appear to be exiting through the snack aisle.  We are not predicting the end of this $10 billion market, rather, we believe that breakfast cereals can aspire to more than single-digit growth and erosion of market share.  To turn the tide, we suggest a renewed focus on innovation, a rebooting of the message to consumers, and, for children’s cereal, an embrace of what you are, even if that means new positioning in a different grocery aisle.”

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