Friday, October 31, 2014

Is the future of cereal in Germany?

A theme that has come up regularly in the last couple of years, both here and in the larger media, is of the troubles facing the cereal industry. You've heard it: Americans are turning away from cereal and manufacturers are floundering trying to figure out what to do.

While there are exceptions to the doom and gloom, we may want to look to Europe to see an example of fresh, creative thinking that may provide some ideas as to how the North American cereal industry could reinvent itself. Specifically, I am thinking of a seven year-old German company that has been thinking outside the box, both literally and figuratively, and creating a whole new market for cereal.

I first came across mymuesli in 2007 shortly after its launch, and at that time I asked whether it was the "cereal of the future?" They were offering custom-made cereals that could be ordered online and packaged in canisters. Their marketing was slick and obviously the product must be equally impressive because they have grown and are now expanding through 15 modern, trendy stores across Germany and Austria, plus their cereals are now available in over 100 cafes and stores.

Of course, American ingenuity was quick to copy. If it would work for mymuesli, it should work in the cereal center of the world, the U.S. Right? Not so quickly. Some tried, like [me]&Goji and MixMyGranola, but both eventually failed. More recently we've seen MixMyOwn enter the market, but it is hard to gauge their success.

While American attempts at customized cereal have been lackluster, this does not mean it cannot work here. I strongly believe that with the right business model this could be one of the ways in which cereal could have new life in the future.

First, let's learn from what makes mymuesli successful. Their success is not simply because they setup a website and sold personalized mixes. Certainly that was novel at the time, but innovation and creativity remain hallmarks of their work. Yes, they continue to give people the opportunity to customize their own recipes, but they are putting much more emphasis on unique pre-made formulas(like a current season's paprika-pumpkin granola and an autumn muesli, and unusual varieties like a cereal for those following a paleo-diet) in specially-designed canisters,  convenient "mymuesli2go" portions, and super-creative ideas like a cereal advent calendar. They have created a premium brand that goes way beyond the mass-marketed cereals found in supermarkets. And, now with their boutique stores they have accentuated the brand even further among the discriminating tastes of Europeans.

It is important, of course, to point out that the place of cereal in continental European society is much different than in North America. They do not have a history of eating cereal for breakfast, and although cereal consumption is increasing it is nowhere close to the U.S., even with recent declines. This definitely gives mymuesli an opportunity to create a new market for itself. It is also important to understand how muesli fits into all of this. Muesli is very European, and in some places like Switzerland is a regular part of their diet, but more in the evening than at breakfast. Muesli is a wholesome cereal built around whole foods, unlike the highly processed cereals of North American laden with sugar, sweeteners, and artificial colors and flavors.

Despite the differences, I still contend that while American entrepreneurs should not simply copy mymuesli, there are numerous things to learn that could not only lead to success, but could ultimately reinvent the cereal industry on this continent. In simple format, here are some key insights that may be transferable to a North American attempt of something this bold and innovative:

1. Go after the high-end. Don't bother trying to compete with the mass-market cereals. There are enough people out there looking for something nutritious, fresh and different.
2. Don't just rely on an Internet store. Cereal needs to be an experience. Boutique stores in upscale shopping areas in larger cities that also offered a cereal bar experience (remember the cereal restaurant craze of few years ago?) could be a hit if executed well.
3. Customization is more than giving people the ability to create their own. Use that small-scale customizing ability to come up with a whole range of unique formulas that incite creativity and viral conversations.
4. Get beyond granola, and possibly even muesli. Granola is passé, and muesli (while an opportunity for growth) is not understood in North America. There is room to work with ingredients and forms familiar to us, but presented in exciting new ways.
5. Success in the U.S. is going to require adequate capitalization. A small start-up without adequate funding may not be able to get the traction to breakthrough in this highly competitive climate.

In my opinion, mymuesli is possibly the most exciting cereal company in the industry today. Period. I know that during my next trip to Germany I will be checking them out personally. I hope that cereal entrepreneurs and companies will take them more seriously, and take another look at this amazing company.

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