Breakfast Cereals - Pan-European Overview - April 2004

SUMMARY

Mintel's latest pan-European report has been designed to offer you an actionable guide to the European market for breakfast cereals.

Written by local industry experts for industry professionals, it provides the level of information you need to be able to focus your marketing activity towards the most profitable sectors of the market. As it maps out the industry trends that shape the sector in each of the five key European markets, it also uses consumer research to identify key target groups whose custom you must capture.

Germany- Time spent at the breakfast table is diminishing in Germany, however an interesting phenomenon has been developing - in large households individuals are tending to choose their own meals and eat alone. The opportunity is for a broad range of products and shift towards smaller packs or single-portions. How had traditional suppliers fared against the strong discount chains such as Aldi offering their own-brand alternatives? How can you capitalise upon the trends for adult lines, cross boundary extensions and luxury muesli?

France- Breakfast is not traditionally a large meal in France, however the market has remained relatively buoyant. Indulgent adult products such as those containing chocolate chunks or flakes are being launched. How can suppliers target the teenagers and young adults who are vital to the future growth of this sector?

Spain- A declining birth rate and ageing population is giving suppliers many opportunities in Spain. Healthy eating and snacking trends combined with the growth in popularity of organic foods has changed the face of this sector. Where do most Spanish consumers buy their cereal from? Have discounters had a similar impact in Spain as they have across Germany?

UK- The declining number of children has a major impact on this market and the traditional breakfast cereal market will diminish. But where are the areas of growth for your business? Single person households and an increased number of over 55s are favourable emerging trends. What impact will the functional health trends have upon the market? How have the major suppliers fared against the growing popularity of own-brand cereals?

Italy- a very dynamic market with ready-to-eat cereals accounting for nearly 98% of the total market value. Why are Italian women the prime target for cereal manufacturers? How can your business benefit from the trend for lighter breakfasts and eating quickly? There has been a change in breakfast eating habits as a result of the trend towards healthy eating and demand for added-value goods. Where are the main threats to this sector of the food industry?

TABLE OF CONTENTS

Introduction

Definition

Executive Summary

France

• Not big breakfast eaters
• Rate of growth starting to slow
• Hot cereals have only 1% of the market
• French have a particular fondness for chocolate cereals
• But fitness also appeals
• Supermarkets and hypermarkets dominate sales
• Kellogg's and Cereal Partners lead the market
• Indulgence and health
• More growth, but not without effort

Germany

• Breakfast remains important, though not to all young adults
• Shift to smaller households can dent market
• Consumers get pickier
• Increasing interest in healthy eating, 'wellness' and organics
• Discounters' entry hits sales
• Kellogg is still market leader, despite some loss of share to own-label
• Adult lines, cross-boundary extensions, and luxury muesli on the rise
• The potential for growth is still marked

Italy

• Good market growth
• Hot breakfast not as popular in Italy as in northern Europe
• Penetration of cereals remains comparatively low
• Health and indulgence are key cereals trends
• Children's segment has one third of sales
• Breakfast eating habits are changing
• New launches also generate consumer interest
• Market led by Kellogg and Nestlé Cereal Partners
• Supplier effort required to maintain cereals consumption, at breakfast or other occasions
• Room to expand penetration

Spain

• Current consumption is comparatively low in Spain
• Breakfast is not typically a large meal in Spain
• Healthy eating issues
• Slower growth in last two years
• Children's cereals take one third of sales
• Distribution primarily through grocery multiples
• Growing competition from own-label
• Adult and organic are themes for NPD
• Expanding the consumer base
• Prospects

UK

• Demographic influences
• Value recovery continues
• The corn sector struggles
• Top three manufacturers dominate
• Heavily promoted category
• Distribution
• Consumer behaviour
• Future trends

Market Drivers

• As population is ageing, there is potential to increase consumption among over 44-year-olds
• Figure 1: Total population by age, by country, 2002

Market Size and Trends

• Sales by value
• As the least mature cereal markets, Italy and Spain are the fastest-growing
• Figure 2: Indexed retail value sales of breakfast cereal, at current prices, by country, 1998-2003
• UK leads in breakfast cereals sales, accounting for the majority of European sales
• Figure 3: Retail value sales of breakfast cereal, at current prices, by country, 1998-2003
• Figure 4: Retail value sales of breakfast cereals, % share by country, 2003
• Sales by volume
• Volume growth outpaced by value in all countries except Germany
• Figure 5: Indexed retail volume sales of breakfast cereals, by country, 1998-2003
• Mature UK breakfast cereals market continues to show volume growth
• Figure 6: Retail volume sales of breakfast cereals, by country, 1998-2003
• Figure 7: Retail volume sales of breakfast cereal, % share by country, 2003

Market Segmentation

• RTE vs. hot breakfast cereals
• Ready-to-eat accounts for vast majority of value and volume breakfast cereal sales
• Figure 8: Retail value sales of breakfast cereal, by type, by country, 2003
• Figure 9: Retail value sales of breakfast cereals, by type, by country, 2003
• Volume sales of hot breakfast cereal are highest in Germany
• Figure 10: Retail volume sales of breakfast cereals, by type, by country, 2003
• Figure 11: Retail sales of ready-to-eat breakfast cereals, value vs. volume, by country, 2003
• Breakfast cereals are most expensive in Italy, cheapest in Germany
• Figure 12: Average price paid for breakfast cereals, by type, by country, 2003
• RTE is the most expensive breakfast cereal type
• Figure 13: Average price paid for breakfast cereals, by country, 2003
• Children's varieties take the largest share in all countries
• Figure 14: Retail value sales of RTE breakfast cereals, children's vs. other, 2003
• Children's varieties are most important in France
• Figure 15: Retail value sales of RTE breakfast cereal, children's vs. other, by country, 2003
• Value sales of muesli are highest in UK and Germany and lowest in Spain
• Figure 16: Retail value sales of breakfast cereal, by type, by country, 2003

Distribution

• Traditional stores take larger share of cereals sales in Italy and Spain than elsewhere
• Figure 17: Retail value sales of breakfast cereals, by outlet type, by country, 2003
• Figure 18: Retail value sales of breakfast cereals, by outlet type, by country, 2003

The Supply Structure

• Branded products dominate market, own-label sales highest in Germany
• Figure 19: Retail value sales of breakfast cereal, brands vs. own-label, by country, 2003
• Own-label is stronger in Germany due to higher focus on price at point of purchase
• Figure 20: Retail value sales of breakfast cereals, brands vs. own-label, by country, 2003

The Consumer

• Nearly 9 in 10 British adults eat breakfast cereals
• Figure 21: Consumption of breakfast cereals, by country, 2003
• British also eat breakfast cereals most often, the French eat it least often
• Figure 22: Penetration and frequency of eating breakfast cereals, by country, 2003
• Women are typically more likely than men to eat cereal
• Figure 23: Penetration of breakfast cereals, by gender and age, by country, 2003
• Except in Britain, consumption peaks among under-45s
• Figure 24: Penetration of breakfast cereals, by age, by country, 2003
• In Britain, Germany and Spain high earners are most likely to eat breakfast cereals...
• Figure 25: Penetration of breakfast cereals, by income, by country, 2003
• ...while in France the most affluent are least likely to eat it
• Figure 26: Penetration of breakfast cereals, by income, by country, 2003
• Non working adults are less likely to eat breakfast cereals
• Figure 27: Penetration of breakfast cereals, by working status, by country, 2003
• Figure 28: Penetration of breakfast cereals, by working status, by country, 2003
• French adults are least likely to snack, suggesting they favour fixed meal times
• Figure 29: Attitudes towards diet, by country, 2003
• British adults are most interested in eating a high-fibre diet, French are least likely to do so
• Figure 30: Likelihood of eating a high-fibre diet, by country, 2003
• French who eat breakfast cereal are most likely to count calories and eat light food
• Figure 31: Attitudes towards diet, by breakfast cereal consumers, by country, 2003
• Breakfast cereal consumers are more likely to avoid fats than sugar
• Figure 32: Attitudes towards sugar and fats, by breakfast cereal consumers, by country, 2003
• French breakfast cereal consumers are the most likely to look for lowest prices
• Figure 33: Attitudes towards brands and shopping, by breakfast cereal consumers, by country, 2003
• Figure 34: Likelihood of looking for lowest possible prices, by country, 2003
• French breakfast cereal consumers are most likely to be concerned with ingredients
• Figure 35: Attitudes towards food contents, by breakfast cereal consumers, by country, 2003
• British breakfast cereals consumers are the most likely to be brand loyal
• Figure 36: Attitudes towards brands, by breakfast cereal consumers, by country, 2003

Forecast

• Sales by value
• Although Spain is the least mature market, future growth will be slow
• Figure 37: Forecast indexed retail value sales of breakfast cereals, by country, 2003-07
• Italy is forecast to be the fastest-growing breakfast cereals market in value terms
• Figure 38: Forecast for total retail value sales of breakfast cereals, by country, 2003-07
• UK market is expected to continue to dominate European market, accounting for about half of the total
• Figure 39: Forecast % share of value sales of breakfast cereals, by country, 2007
• Sales by volume
• Volume growth in Spain surpasses value, vice versa in Italy
• Figure 40: Forecast indexed retail volume sales of breakfast cereals, by country, 2003-07
• Mature UK market is forecast to start declining in volume from 2005
• Figure 41: Forecast for total retail volume sales of breakfast cereal, by country, 2003-07
• UK will continue to be largest volume and value market for breakfast cereals
• Figure 42: Forecast % share of volume sales of breakfast cereals, by country, 2007
• Spend is highest in UK, as is consumption, while in Italy spend is high despite low volume consumed
• Figure 43: Forecast per capita spend and consumpton of breakfast cereals, by country, 2007
• Figure 44: Forecast per capita spend and consumpton of breakfast cereals, by country, 2007
• Breakfast cereal is expected to be most expensive in France and Italy, cheapest in Germany
• Figure 45: Forecast average price paid (€/kg), by country, 2007