MOM Brands executives hope that retailers see their company as an alternative to the existing choices in the cereal section.
Officials at MOM Brands know that it takes a lot to play with the big boys in the cereal market. However, they say that they are prepared to do what it takes to grab a larger share of the gigantic and lucrative $11 billion-plus segment, even if it means investing boatloads of money to get there.
So far, it seems that this strategy is paying off for the Lakeville, Minn.-based company. MOM Brands executives say that the company now controls about 10% of pound sales in the hot and cold cereal segments—up from about 4% a decade ago—and they are certain that they can gobble up more market share in coming years through a combination of product introductions, aggressive pricing and simply getting the word out to retailers and consumers that MOM Brands’ products are unique in several key ways.
Frankly, though, MOM Brands has a big hill to climb in order to continue its recent success. Yet, even with the tough road ahead, industry observers say they are still impressed with the company’s commitment to its brand and the cereal market, as well as its new-found desire to go from a previously quiet and press-shy company to one that appears ready to challenge the major players in this category.
MOM Brands’ transition has been slow and steady. Ownership started gearing up for this move as far back as 2001 when the company committed to investing in two new manufacturing plants. Today, more than $500 million in investments later, MOM Brands operates three state-of-the-art plants (Northfield, Minn., Tremonton, Utah and Asheboro, N.C.) and five distribution centers throughout the country. Next came a name change from Malt-O-Meal, the name of its original brand introduced in 1919, to MOM Brands. That move, company officials say, has enabled MOM Brands to move into different segments of the category without having to let go of too much of its past.
Finally, it appears that MOM Brands officials have shaken off the cobwebs and are not going to be quiet about the company’s success and its burgeoning assortment of products, which currently number 11 brands and more than 600 SKUs. The company’s brands are Malt-O-Meal Hot Wheat, its first cereal, Malt-O-Meal ready-to-eat cereal, Three Sisters, Mom’s Best, Sally’s, Farina Mills, BetterOats, Bear River Valley, CoCo Wheats, Oat Revolution and Better Oats RAW Pure & Simple.
“Our strategy now is to get the word out about MOM Brands and what it brings to the table,” says Jesse Garcia, senior vice president and chief customer officer. “Retailers want to hear about our investments and they want to know that we are completely committed to the ready-to-eat and hot cereal segments. We are investing in this category.”
The move to the new name was the icing on the cake in the transition. “The name change to MOM Brands made it clear that we are becoming a full house of brands, not just Malt-O-Meal, which still remains a big part of our company,” Garcia adds.
But how does this still relatively-small company grab more market share in a category dominated by two behemoths, Kellogg and General Mills, with well-known and revered brands and marketing budgets that rank near the top of all CPG companies?
Garcia sees an opening that will help retailers make more money and give consumers more options in variety and price points. “In our view the other cereal companies have forced retailers and consumers to compromise on taste or value,” he says. “We feel that this does not have to be mutually exclusive. We think we offer consumers the highest quality product at great price points.
“Taste is not a trend. We are very focused on delivering a high-quality cereal to consumers at the best possible price.”
He also says that MOM Brands will allow retailers to compete on price and still be profitable in the cereal aisle. Officials say that MOM Brands products sell less on promotion, which results in higher margins for retailers and increasing sales. “We produce great margins for retailers and that translates into the opportunity to make a lot of money,” Garcia adds.
Still, Garcia says that he is not looking to displace other companies or brands. Rather, he is just hopeful that retailers will give MOM Brands either a spot on their shelves or consider expanding what they already allocate to the company. “Maybe a retailer does not need to carry every size of a competitor’s brand,” he says. “Maybe they want to give another brand a chance, especially one that can help consumers stretch their paychecks a little further and still give a great profit to the retailer.”
The company is also committed to getting the word out to shoppers, something it tried about a decade ago and quickly curtailed. “When we tried it before, we did not have the capacity to fulfill the demand,” Garcia says. “Now we have invested in the company to the point where we are ready to become much more aggressive with our marketing and other promotional efforts. Still, we are going to do it in a cost-efficient manner, but the plan is to tell consumers who we are, what we make and how it is different than what is already out there.”
He says the company is working on digital marketing as well as television and radio advertising. “It won’t be a lot, but it will be effective,” Garcia says. “The key is to stay focused and committed to our plan. We want to keep introducing items that make sense, focus on the consumer and the retailer and provide solutions in the cereal category.”