Better-for-you breakfast options are jump-starting consumers’ mornings and adding dollars to retailers’ cash registers.
By all accounts, the better-for-you breakfast category has grown dramatically over the past year—and retailers and consumers are looking for more. “We have heard from both our consumers and our retailers that there is a growing need to have products that provide additional functionality and better nutritional values than is currently available,” says Joel Warady, chief sales and marketing officer for Enjoy Life Foods, based in Schiller Park, Ill.
Burgeoning segments include the natural and organic breakfast category. Comprised of cold cereal, granola, hot cereals, waffles, snack bars and toaster pastries, it is up 8% in dollar sales and 7% in unit sales year-over-year, say industry observers. Gluten-free continues to have a significant impact as well. Gluten-free products now account for more than 11% of all category sales, with remarkable growth of 34% over this period last year.
Raw food is also trending hot right now, although still a niche segment.
When looking for healthier breakfast options, shoppers are paying close attention to claims made on packaging. According to a recent study by Chicago-based marketing firm Mintel, low-cholesterol and heart-healthy are the top two claims consumers look for when selecting breakfast products today. Low fat and high-fiber are also high up on the healthy checklist.
Mintel also found that more than half of people surveyed would be willing to increase spending on higher-quality pre-packaged breakfast foods and 41% would like to have more organic options. This is especially true in segments such as frozen waffles, pancake mixes and sausages. Additionally, nearly half (48%) of consumers revealed they would like to see more restaurant-style options in their grocery store’s aisles.
This, combined with the increasing number of consumers who are eating breakfast at home, means the better-for-you breakfast category should continue to see solid growth through the next five years, say observers. Mintel shows the overall breakfast food category to be valued at $12 billion and predicts growth during the next five years to be at around 26%, putting the category’s worth at almost $16 billion by 2017.
“We do see strong growth ahead but it is clear to achieve this, companies will need to find a balance between quality and price,” says Carla Dobre-Chastain, an analyst with Mintel.
While price clearly plays a role, so too does convenience. Breakfast has also expanded from one early morning meal to two eating opportunities, one in the early morning and one again as a mid-morning snack.
“The eating habits of consumers are changing,” says Enjoy Life’s Warady. “Whereas in the past, consumers would enjoy a sit-down breakfast, today many breakfasts are eaten ‘on-the-go.’” Enjoy Life is currently exploring how they can better meet these developing eating trends. The company recently launched a Crunchy Flax with Chia cereal, a product that Warady says, “boasts a fantastic nutritional profile.” The cereal features high omega-3s, high protein and is a good source of fiber. “The retailer response has been very strong, and we are experiencing new placements on a weekly basis,” he says. With the Crunchy Flax and Chia now available, Enjoy Life had decided to discontinue its existing Crunchy Rice cereal. However, after receiving a number of comments from both consumers and retailers, officials at Enjoy Life are bringing the product back in bright new packaging. “We made a mistake, and when we make a mistake such as this, and our consumers tell us of such, we react immediately. Crunchy Rice will be back by popular demand at Expo West,” says Warady.
Officials at Nature’s Path Organic Foods say organics sales are as strong as ever. According to Maria Emmer-Aanes, director of marketing and communications for the Richmond, B.C., Canada-based company, organic cereals, bars and waffles are now almost 40% of all sales in the grocery channel with a 2-to-1 growth ratio to ‘natural’ breakfast.
“Our granola is on fire, boasting 20% annual lift from 2011, with mature SKUs like Pumpkin Flax Granola rocketing up the cereal ranking, due in part to our new packaging and our TV and sampling campaign,” says Emmer-Aanes. “Additionally, our hot cereal boasts double-digit growth in every region of the U.S. and we lead in every segment and sub segment of gluten-free.”
At Expo West, taking place in March, in Anaheim, Calif., Nature’s Path will be highlighting an entirely new cereal concept called Qi’a. Company officials say it combines the superfood ingredients of chia, hemp and buckwheat, providing an excellent source of ALA omega-3s and is a good source of fiber. The three flavors—apple cinnamon, cranberry vanilla and original—can be enjoyed in a variety of ways: simply add milk or a milk substitute and watch it transform into a substantial and healthy meal, blend into yogurt and fruit smoothies or sprinkle into salads and soup for added nutrients, add officials.
Emmer-Aanes says to date Qi’a has been doing extremely well among natural food retailers and consumers. It will be available in most Whole Foods Markets nationwide by late February. “We fully expect it to be increasingly successful, as it really is unlike anything else on the market right now,” she says, adding that the resealable bag makes it easily portable. “Chia is becoming more popular among health-minded consumers who are seeking new superfoods for added nutrients.”
Emmer-Aanes says other Expo West launches will include several new gluten-free products: Four new gluten-free granolas (including Honey Oat and Fruit & Nut) and four granola bars (including Trail Mix and Dark Chocolate Chip). She says more will be introduced in the following months. “There is a rising demand for gluten-free products, and we are addressing it head on with these delicious new products,” she says.
Less is more
As healthier breakfast options become more main stream manufacturers are finding it important to create differentiation from their competition. Officials at Attune Foods says its “less is better approach” helps it stand out from the pack.
“At Attune Foods, we focus our products to be consistent with our mantra of ‘Simple Ingredients. Simply Made,’” says Daniel Wiser, director of marketing for the San Francisco-based company. Wiser says that Attune’s cereals contain very few ingredients, for example, Uncle Sam Original and Uncle Sam Raisin Bran contain only four ingredients, while Erewhon Organic Crispy Brown Rice has three ingredients and Erewhon Organic Corn Flakes has only two ingredients. “Additionally, all the products we make at Attune Foods are non-GMO project verified. We proudly offer eight Certified Gluten-free Erewhon cereals, and 10 Whole Grain Certified cereals from Erewhon and Uncle Sam,” says Wiser.
While convenience typically rules consumer choice in the breakfast category, judging by the sales growth officials at Hodgson Mill are seeing, qualities such as healthfulness and taste are also important factors. According to Ray Martin, vice president, sales and marketing for the Effingham, Ill.–based company, interest in the category continues to come from consumers looking for the benefits whole grains offer. “Hodgson Mill’s positive trends are also impacted by the fact that we only buy the highest grade and are we grown in the U.S.,” says Martin. He adds that Non-GMO continues to drive consumer interest as well. “All of the cereals mentioned are verified by the Non-GMO project. We are proud to display that logo on our packaging,” he says. Hodgson Mill has more than 70 products that are verified Non-GMO.
Martin says the Hodgson Mill line of hot non-instant cereals has seen an overall growth of 6% this year, citing best performers Steel Cut Oats and Wheat Germ with Cinnamon and Milled Flax Seed growing 15% and 26% respectively. “Our Oat Bran cereal is a leader in the natural category and continues to grow. We also are doing well with our Milled Flax Seed, which we include in the cereal category as so many consumers tend to use it as a cereal additive,” says Martin. He says the oat Bran cereal sales are up 9%.
At Expo West Hodgson Mill officials expect to be showing an improved version of its Multi-Grain cereal with along with “some exciting grain changes.”
As better for you options become more popular, observers say retailers’ marketing strategies may need to change. Attune’s Wiser says it is time for retailers to consider moving away from the traditional brand/company merchandising set to more of an intuitive consumer model. “When the consumer shops the category, they don’t think of the manufacturer first. Our research suggests that consumers look for nutrition as a primary motivator in their decision tree—therefore aligning the category by the benefit makes more consumer sense,” he says. Given Attune’s ingredient strategy, Wiser says one opportunity for its products to be displayed would be as part of a “simplicity” set—which could also include brands like Uncle Sam, Erewhon, Shredded Wheat, Grape Nuts and Quaker Oatmeal.
Warady sees Enjoy Life products primarily merchandised in the regular cereal aisle, a place he agrees, makes sense from a consumer, retailer and manufacturer perspective. “As more people seek out a gluten-free diet as part of their daily regimen, and the fact that our products are geared toward the everyday consumer who is seeking a better tasting, more healthy breakfast, we see significantly more of our retailers merchandising our breakfast items in the cereal aisle, integrated with other healthy and natural products,” says Warady.
Hodgson Mill is helping cereal sales grow and is offering added value to consumers with its Hodgson Mill Recipe blog, which can be found at www.HodgsonMill.com. “We have created a collection of recipes with beautiful photos and step-by-step instructions to help consumers use our cereal products in other ways including muffins, breads and bars,” says Martin.