Tuesday, May 25, 2010

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.

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Thursday, May 20, 2010

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.

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Saturday, May 15, 2010

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.

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Monday, May 10, 2010

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.

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Saturday, May 01, 2010

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.

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