Monday, June 28, 2010

Kellogg's recall

Consumer recalls are never a good thing for a company. Of course, how the recall is handled is critical for whether this turns into a public relations disaster. Nevertheless, it does leave a certain stain on their reputation. Kellogg recently issued a voluntary recall of select packages of Corn Pops, Honey Smacks, Froot Loops and Apple Jacks cereals, around 28 million boxes! The issue is an unusual smell and flavor that comes from the packages' liners. But, according to Kellogg, there is no real health danger as the ingredient (which they don't name) is a common ingredient in the waxy resins on the liner. The ingredient is FDA approved, but in quantities higher than normal.

So far this has not turned into anything like the recent problems at Toyota, and if Kellogg continues to handle this in an honest, upfront manner it will easily blow over. I think their reputation would be harmed more if the recalled cereals were some of their more health-oriented brands.

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Thursday, June 24, 2010

Cereal upstarts V

In recent weeks I have had a series of posts looking inside three relative newer comers to the cereal industry - companies that are trying to break into the marketplace with their unique cereal concepts. I appreciate the willingness of Carolyn Creswell (Carman's), Adam Sirois ([me]&goji), and Maximillian Cascone (Pro Oats) to share the candid thoughts and dreams behind their respective ventures.

As we've observed, these company leaders are passionate about their cereal and optimistic for the future despite the challenges they face against the well-entrenched cereal marketplace. The fact that there are alternative cereal brands, however, suggests that perhaps they are on to something. There obviously are a significant number of consumers who want something beyond ordinary in their breakfast bowl, and for this reason there is still room for companies who can truly innovate and think outside the (cereal!) box.

In the words of Pro Oat's Cascone, "We're doing something different, something we truly believe in and that hasn't been focus-grouped into oblivion. It's very much an 'upstart' mentality - one that says, hey, we're here, and this is a product that has the potential to really take over a large part of the market - we're ready to do it!"

These three highlighted companies are not the only newcomers on the scene. There are others, such as MixMyGranola, Umpqua Oats and YogActive. The reality is that, like in any industry, there will be winners and losers. Some of these entrepreneurs will never achieve enough traction to succeed. A rare few may become powerhouses to the point of either changing the industry or becoming take-over targets of big multi-nationals. This latter scenario is the story of some other previous upstarts like Bear Naked, Cascadian Farms and Kashi.

It will be interesting to watch the development of these upstarts in the coming months and years. I'll you keep you posted.

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Monday, June 21, 2010

Quaker goes vintage

Add a fourth cereal company trying to tap into the nostalgic sentimentality of consumers. According to several reports on vintage-looking boxes of Cap'n Crunch and Crunchberries are showing up in some stores. UPDATE 8/31/10: There is also a Peanut Butter Cap'n Crunch box.

This is a great fit, because Cap'n Crunch is truly a classic from childhood!

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Thursday, June 17, 2010

Cereal upstarts IV

With life slowing down a little I'm finally getting back to my series on new companies breaking into the cereal market...

From my previous posts we have observed that the three companies I am using in this case study are enthusiastic about their products and business But, there are challenges. Specifically, I was interested to find out the obstacles that newcomers into the cereal market face. Each of them had a unique answer:

I was not really surprised by what Carolyn Creswell of Carman's shared. For this company it simply comes down to money: "The cereal giants have large marketing budgets which offers them an opportunity to promote and offer price cuts on a very regular basis. As a small company (under 20 employees!) we just don’t have that sort of capital." Their approach is to "keep our costs to a minimum and focus on top quality at a fair price".

But, smaller, upstart companies have other challenges too. [me]&goji faces challenges specific to its own business model which focuses on creating custom cereals sold only online. Adam Sirois stated that "It is a challenge for us as on online company to communicate our product and convince new customers to take a chance on something they can't hold or haven't had before." The big retail companies have a corner on store shelf space and consumers' minds. Gaining familiarity is tough.

Interestingly, Pro Oats sees a completely different type of challenge: ingredient availability. Maximillian Cascone put it this way: "We were surprised by the challenges we faced finding all-natural ingredients from bulk suppliers. Almost everything we found had some kind of coloring or chemical or other garbage that was exactly what we were trying to avoid. You'd be surprised how few suppliers there are of organic and all-natural dried fruit in bulk - almost every place we found all traced back to one or two suppliers." And, in most cases these suppliers have minimum order requirements making it difficult for a small company still in limited volume production.

So, with all these challenges what is the future of cereal upstarts? I'll examine that in my next post.

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Sunday, June 13, 2010

New from Kellogg

Life has been crazy the last couple of weeks. I will get back to my "Cereal upstarts" series ASAP, but in the meantime here are some recent developments:
Kellogg is introducing a new variety of its cornerstone cereal, Corn Flakes. New Corn Flakes Simply Cinnamon is "oven-toasted Corn Flakes with a touch of delicious cinnamon flavor". New varieties are hardly new, and this is not the first Corn Flakes variant, but this is significant because Kellogg has yet to find a successful one for the Corn Flakes brand. Will this one work? It just might.

On another note, there have been some unconfirmed sightings of a Toy Story 3 cereal from Kellogg as part of the new movie release. But, so far I haven't seen it and there is no indication of one on Kellogg's own Toy Story 3 promotional website. Has anyone seen this cereal? If so, please let me know. UPDATE: June 21/10: Confirmed sighting of box.

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