Keeping the breakfast aisle fresh and exciting has been made easier by the colorful packaging and the addition of freeze-dried berries, but still, the ready-to-eat cereal category remains basically flat, maybe because so many consumers are avoiding carbohydrates these days.
"We are avidly seeking low-carb or reduced-carb items," said one grocery buyer who did not want to be named. He also told SN he had recently seen a cereal at a trade show that had 7 grams of carbohydrates per serving.
"I am seeing a lot of indications that more products will be marketed as low-carbohydrate," said Leah McGrath, dietitian for Ingles Markets, Black Mountain, N.C. "Sometimes, it seems that everybody is either on [the Atkins diet] or diabetic."
Meeting the diverse breakfast needs of consumers is not always easy for grocers, considering the stiff competition from various channels.
"You want to own the whole breakfast occasion, not just the ready-to-eat cereal category," noted consultant Don Stuart, partner in Cannondale Associates, Wilton, Conn. "[Supermarkets] are not competing just against Wal-Mart, but against McDonald's, all the grab-and-go formats. It could be bagels. Or juice. You want to provide a solution for a quick-and-easy breakfast at home."
For example, Waldbaum's, a Long Island, N.Y., chain which is a division of A&P, Montvale, N.J., recently advertised a wrap-around gatefold of "easy-to-make meals" featuring its America's Choice label of breakfast foods on sale: apple juice, frozen waffles, frozen bagels, frozen french toast, frozen strawberries and frozen whipped topping. Pathmark, Carteret, N.J., also recently ran a special on eggs, bacon and refrigerated orange juice: Buy one of each for $3 total.
To keep the whole breakfast picture top-of-mind for shoppers, retailers, and even manufacturers, rely on cross-merchandising to remind shoppers to pick up bananas, say, on their way down the cereal aisle.
"We have a spinner rack, and we put a few bunches of bananas on each peg, and we put it in the center of the aisle," said Ron Ridgway, president of Tark's Market, Talent, Ore., an independent. "Sometimes, we put a basket of soy milk in the cereal aisle."
He said Tark's, a family-owned store of about 18,000 square feet, has considerably expanded its offering of natural cereals. "There are a ton of new healthy cereals that are really tasty," he said, "not like some of the things 20 years ago that really weren't very good."
Ridgway said he had tried raspberries on his spinner rack, but they didn't do much. "Now we're talking about raisins, bulk or packaged," he said. He has a bulk cereal department as well, and credits his affiliation with San Francisco-based Raise The Bar for some of the marketing ideas he has implemented. "They have opened the door to how we should accomplish meeting customer requests," he said, including breakfast requests for various cereals.
Manufacturers continue cross-merchandising by putting toys inside a cereal box, certainly a time-honored tradition. This summer, it's carried out with a 21st-century spin in a partnership between General Mills and Hasbro, maker of the games Monopoly, Operation, Candy Land, Scrabble and others. Five Atari games are available on CD-ROM, free inside specially marked packages of Cheerios, Reese's Puffs, Honey Nut Cheerios, Cinnamon Toast Crunch and Golden Grahams. A national FSI dropped July 12-13 weekend. Each CD-ROM also contains America Online version 8.0.
To top it off, General Mills, under license from Hasbro Consumer Products, introduced a Monopoly cereal, crispy sweetened whole wheat and rice cereal pieces imprinted with the Monopoly game pieces, and marshmallow bits that resemble the property cards. The cereal will be available for a limited time only, at a suggested retail of $2.49.
"We take advantage of most of these type items," said John Corcoran, category manager of grocery at Big Y, Springfield, Mass., who added that the new Monopoly-themed cereal is selling very well.
Overall, the cereal category has remained flat to declining with a few notable exceptions, such as the 66% increase in dollar sales shown in the past year by Nature's Path organic cereal, now the nation's No. 8 vendor. Still, that company's sales are only $14.2 million, compared to the nearly $7 billion in the ready-to-eat cereal category as a whole in the United States, or the $2.23 billion for Kellogg, which has assumed the leadership position again, followed closely by General Mills, with $2.17 billion, then Kraft and Quaker Oats, according to Information Resources Inc., Chicago.
But, all of the top four showed declines. Private-label cereal, in the No. 5 position among vendors, increased by 3.5% in dollar sales for the year ended June 15, according to IRI. Since the implementation of the Organic Rule on Oct. 21, 2002, organics have become much more accepted by mainstream retailers, noted David Neuman, vice president of sales and marketing for Nature's Path, Richmond, B.C. "They can no longer deny the legitimacy of this category or the growth and gross margin contributions it contributes to their product mix," he said.
In Canada, the situation is a little different, and better, according to ACNielsen, Schaumburg, Ill. Mainstream cereals have grown 4% for the last 52 weeks ended June, but natural/organic cereals have grown 25%. Nature's Path, the No. 1 brand in Canadian grocery, is double that with 49%.
Nature's Path is now available for sale at Costco nationwide in the United States and Canada, and soon Costco Korea, Neuman said, and it is the very first organic cereal ever to test with Sam's Club and Wal-Mart, being in the midst of those tests now. Its organic EnviroKidz cereals are in a number of school systems with 1- and 2-ounce bowls.
"We are spending more money than ever marketing our top brands -- through demos, print ads in highly circulated mainstream and core consumer magazines," Neuman said. And the company is preparing for an eight-city, North American five-week demo program called the EnviroKidz Summer Adventure, sampling at participating retailers and at certain outdoor fairs, zoos, science centers and the like, educating the consumers (and their kids) on the benefits of its products, cause marketing program and organic agriculture.
Nicola MacGuire, who came from Tesco in the United Kingdom to become Meijer's Healthy Living project manager, said the Grand Rapids, Mich.-based chain's Indianapolis stores are rolling out natural and organic sets that, in cereal, are the biggest and best she has ever seen because of the clear signage. Shelf-edge icons with pastel block letters make it immediately clear what attributes the cereal has or doesn't have, such as GF, for gluten-free; other symbols for sugar-free or low fat.
"Our cereal is one of the best sets because if someone has chosen natural/organic, or their child is a celiac, they can look at the shelf edge and see, without lifting the cereal box to read the label, what's in it, or not in it.
"That's what makes ours a lot stronger. A lot of people just have the natural and organic, but ours takes it to the next level. We also have in front of the cereal aisle a lot of brochures that explain what we're doing, and what each of the icons means," she said. "The letters are big. It's very attractive."
"In the cereal aisle you'll find 12 or 16 feet of cereal, overhead signs that it's natural/organic or any other health benefits," MacGuire said. The first project opened in Indianapolis on April 14, and another on May 7, "so we're just monitoring it now, trying to work out whether it's giving more sales from bigger sets, or whether 12 feet is ample, instead of 20 feet."
Stew Leonard's, an independent based in Norwalk, Conn., recently added an all-natural granola cereal to its mix, which typically includes 16 varieties, only the top sellers. Yet, explained spokeswoman and dietitian Meghan Flynn, a couple of months ago, a little company in nearby Darien approached Stew's with Bear Naked Granola.
"It's to die for," Flynn carried on. "It has 33% fruit and nuts, the moms are eating it, the kids are snacking on it."
Stew Leonard's tried the Bear Naked Granola first in its Norwalk store with some "great in-store signage and sampling, and it's been our No. 1-selling store for that product," Flynn said.
Although sampling is a recognized effective merchandising technique, Flynn said it had never been done in the cereal aisle before they tried the Bear Naked brand. The product is so named because it contains "bear-sized" fruits, as well as 14 other ingredients, and retails at Stew's at $4.99 for a 16-ounce bag, which is a dollar less than it is offered on the manufacturer's Web site.
Stew Leonard's is also one of the few retailers carrying Atkin's new breakfast bars, called Morning Start. Atkins products are stocked all together in one place in the store, although the location differs store to store.
B.J.'s Wholesale Club and GNC are the only other chain stores stocking them.
McGrath, the Ingles dietitian, noted there are a lot of meal replacement bars, from Balance Bars to Zone bars, because of the "on-the-go mentality, eat-it-in-your-car kind of thing," she told SN. "I wouldn't be surprised if all ages are eating them. Milk and cereal bars are being marketed to kids, meal replacement bars like Zone and Atkins and Balance are for active adults, [and] Lucerna bars for diabetics."
