Cereal upstarts III

Continuing with my exploration of new companies breaking into the cereal market...

As we discovered in my last post, the three sample companies are optimistic over their prospects. But, they face many challenges, especially as they compete against large, multi-national cereal companies in an already crowded cereal marketplace. While they recognize the challenges, they seem undaunted in their determination and belief in what they have to offer.

Pro Oats' Maximillian Cascone has the following perspective: "Like any smaller company, we don't have the advantage of the economies of scale that a company like Quaker does. We don't have the luxury of multi-million dollar ad campaigns to brainwash consumers into buying our product. So our goal is to create a product that beats theirs in its healthful properties and make our way into markets that we think will be attracted to our product, even if it is slightly more expensive than the big name brands. As our brand becomes more widely known, we will grow into larger markets."

It is apparent for our upstarts that the strategy is finding a niche that will give them an edge. Pro Oats focuses on a "very-high protein quick oatmeal that is all-natural". Carolyn Creswell from Carman's is also up to the challenge, and is convinced that they have something unique to offer because in their assessment in the U.S. there are "not many companies offering a pure, natural product that wasn't full of sugar or flavourings". She states that many Americans who tried Carman's in Australia contacted them requesting the products in their home country.

But, it's not only having a unique product that gives these companies a fight chance against the big boys. It also has to do with their entrepreneurial culture. Adam Sirois of [me]&goji is convinced it comes down to "innovation and agility" because "It takes longer to turn big ships so smaller, more nimble companies have an advantage when it comes to meeting the needs of consumers." And, with the availability of social media such as Facebook, etc. "it is easier than ever for a small company to gather customer data [and] really gauge consumer needs, at little or no cost."

Tough competition is obviously their biggest challenge, but there are others as well. We'll explore those in my next post.

Technorati Tags: cereal, Carman's, me+and+goji, Pro-Oats, breakfastbowl

Cereal upstarts II

I am currently examining the attempt of newer companies to break into the crowded cereal marketplace, and have chosen three different ones to gain insights into their thinking and strategies: Carman's, [me]&goji, and Pro-Oats.

The first question I posed to their company representatives is: "What do you see as the future of the cereal industry?"

Not surprisingly they are quite optimistic about the future of the industry, and especially their respective company's place in it. While I only interviewed three upstarts, it is interesting that virtually all the new entrants into the cereal market are brands emphasizing healthier cereals. And, this was evident in their responses. They sincerely believe that people are fed up with mass manufactured cereals with questionable nutritional value.

As Adam Sirois of [me]&goji stated, consumers are increasingly realizing "the big companies could spray extruded flakes with vitamins and offset the bland taste with sugar". It is evident that recent concerns about the nutritional value of some cereals is feeding this perception and big, multi-national companies are an easy target, leaving room for those that offer healthier options.

Maximillian Cascone of Pro Oats put it this way: "Like the rest of the food industry, the cereal industry will continue to move towards all-natural and organic ingredients and processes.  This is not because the food companies are being altruistic, but because consumers are becoming more and more conscious of their food choices ... There appears to be a growing consensus and awareness that food and its ingredients and processes can profoundly affect your well-being and overall health. The consumer as always will vote with their wallet, and the smart money will be on natural and organic foods."

To respond to this trend, innovation will thrive. Carman's founder, Carolyn Creswell, believes that the cereal industry will continue "to grow through a range of new product development", especially in light of new research on the health benefits of certain nutrients and foods, such as oats. Many companies are likely to jump on this bandwagon for the foreseeable future. Sirois is convinced that "the future of the cereal industry will show a kick-up of smaller cereal companies. Though the cereal industry is known for having too many options, 95% of those options come from the same 2 or 3 factories. There is still space for innovation in this industry and it will come from the smaller guys, who will be quicker to meet the needs of consumers".

These three companies, along with a myriad of other new health-oriented cereal manufacturers, are obviously convinced that cereal is a lucrative market with great potential as consumers search for alternatives to the common options available to them. Like with any emerging industry, there are many who will try to gain a foothold in the marketplace, but eventually only a handful will survive and there will be industry consolidations, etc. My next couple of posts will examine how these companies plan to compete and the challenges they face.

Technorati Tags: cereal, Carman's, me+and+goji, Pro-Oats, breakfastbowl

Cereal upstarts I

One aspect of the cereal industry that has regularly captured my attention is the attempt by small, emerging companies to break into the cereal marketplace and take on the "big three". There are dozens of alternative brands out there focusing on a particular niche, some appear to be reasonably successful. A few, like Kashi, became so successful that they were actually taken over by one of the big cereal giants (i.e. Kellogg in this case).

Over the next week I will be writing several posts that look deeper into "upstart" cereal companies that are currently trying to gain a foothold into a very crowded cereal marketplace. To do so I have contacted three such companies, representing a diversity of approaches and strategies. Company officials have provided me their perspectives and I will be sharing those in the coming days. A couple have also given me samples to try.

The three companies I will be highlighting are:

• Carman's Find Foods an Australian firm just starting to make a presence in the U.S.
• [me] & goji one of the custom cereal companies, and
• Pro-Oats a small instant oatmeal manufacturer just getting started

I know you will find their stories and insights interesting.

Technorati Tags: cereal, me+and+goji, Pro-Oats, Carman's, entrepreneurs, breakfastbowl

Not Just Cereal

Cereal has long been a convenient snack food, whether for toddlers or sitting in front of the TV in the evening. Now comes a candy, from Nassau Candy company, that combines cereal coated with chocolate in a convenient snack pack container. It's probably not suitable as a breakfast food (although I'm sure people will try!) but it potentially could cement a whole new dimension for cereal.

Not Just Cereal comes in four flavors, and will be available at Walmart ... in the candy aisle.

Technorati Tags: cereal, Not+Just+Cereal, breakfastbowl

Kellogg tries Cinnabon

Making a cinnamon roll cereal is a great idea, but one that hasn't really taken off yet. Now Kellogg has introduced Cinnabon, capitalizing on a licensing agreeement with the well-known baker.

This is not the first attempt by either Kellogg or Cinnabon. In fact, for Kellogg this is the third time. Previously they had produced Cinnamon Mini-Buns and Swirlz, but neither really took. Cinnabon tried to market its own cereals a couple of years ago, also with limited success. This is not a new relationship, as Kellogg has already been selling
Cinnabon Snack Bars.

But this time the cereal could work. Two well-known brands coming together with Kellogg's manufacturing and distribution could make for a winning formula.

Technorati Tags: cereal, Kellogg, Cinnabon, breakfastbowl

General Mill focuses in on three targets

This is not a new story, but actually one from two months ago that I noted but forgot to post...
Despite its recent growth, General Mills is still looking to bolster its position as a food company. At a recent conference they announced that looking ahead they are planning on targeting their food products (of which cereal is a major component) to Hispanics, Boomers and Millenials. Hispanics are projected to be the main source of population growth in the next five years, and special attention will be devoted to mothers and "savoring nature". Baby Boomers are a large, aging, demographic looking for health benefits. General Mills believes that the children of Boomers, the Millenials, are home and family oriented and as a result will tailor products to them, and connect with them through the latest innovations in technology.

It is always interesting to gain some insight into the marketing plans of a large corporation like General Mills. It is good to see them deliberately focus their marketing efforts, although one could argue that perhaps the chosen categories are much too broad. The key for a company of this size is make this more than just window-dressing; but to truly innovate in order to meet the demands and needs of increasingly fickle consumers.

Source: Advertising Age

Technorati Tags: cereal, General+Mills, marketing, breakfastbowl.

Limited outlook for Kellogg

Commenting on the financial performance of cereal companies is not always a useful endeavor, but in light of the current economy and the shifting cereal marketplace it seems to be more relevant right now. Recently I reported on successes at General Mills. But, the future may not be as bright for Kellogg. An analyst with BMO Capital Markets has downgraded Kellogg's stock, foreseeing limited growth from core brands, fewer new products, limited growth with Wal-Mart, and increased competition from Post. Of course, these are mere projections, but they are indicators of some of the challenges cereal companies are facing right now.

Source: BusinessWeek

Technorati Tags: cereal, Kellogg, breakfastbowl

Crazy lawsuits

I've highlighted cereal-related lawsuits before, but usually these had more substance to them then this latest nominee for the Ridiculous Hall of Fame.

A California man launched lawsuits against Kellogg and Quaker for alleged deception in marketing Froot Loops and Crunchberries, respectively, as fruit-related cereals. Much to everyone's surprise, apparently neither of these cereals actually contain real fruit. We are all shocked!

The Froot Loops suit was dismissed, but the case against Crunchberries is moving forward. Maybe it will finally end stupidity across our country.

Not likely. We still have frivolous lawsuits.

Source: SFWeekly

Technorati Tags: cereal, lawsuits, Kellogg, Quaker, breakfastbowl

Cereal gains in a recession

General Mills announced today third quarter financial results which included increased sales and profits. Of particular interest is the growth of their cereal division:

"Net sales for Big G cereals grew 6 percent in the quarter, led by strong introductory sales of new Chocolate Cheerios and Wheaties Fuel, and gains by several established brands such as Multigrain Cheerios and Lucky Charms."

Obviously something is working for General Mills and confirms that cereal seems to do well in a recession, a point we noted several months back.

(Source: General Mills)

Technorati Tags: cereal, General+Mills, recession, breakfastbowl

Targeting Youth

The move is on to narrow the target of cereals. This is evident in Special K to women concerned about weight management, and new Wheaties FUEL for men. Of course, children have been targeted for decades. Kellogg UK is now taking a stab at the youth market, 16-25 with a new cereal called Krave (not to be confused with a Kellogg "Krave" product previously in the U.S.). Their strategy is not just with the chocolate hazelnut taste, but will be marketed with an extensive social media campaign.

That age group is a difficult one to tap into. It will be interesting to see how Kellogg fares in the U.K. and whether a similar niche is attempted elsewhere.

(Source: netimperative)

Technorati Tags: cereal, Kellogg, marketing, breakfastbowl