Breakfast Cereals

Breakfast foods are undergoing a profound change due to paucity of time for the young generation as there is a tendency for nuclear families where both the family members are employed. This is driving the Indian urban household to opt for breakfast cereals. The Indian consumer is also waking up to the need for a healthy lifestyle which necessitates breakfast of a king. The affluent consumer, facing lack of time, is looking for convenient options for nutritious, tasty and quick breakfast. These three needs are driving the growth of an influx of players. Ashok Malkani takes a look at the market for breakfast cereals and the different options that the busy consumers have provided for the entrepreneurs to enter into breakfast food segment.

The need for a healthy and hearty breakfast to take on the day ahead has been repeatedly emphasized. It has been considered as the most important meal of the day providing, as it does, sustenance and energy (i.e., calories) for whatever activities lay ahead. Adelle Davis, an American author and nutritionist whose legacy is celebrated today as: “The first lady of nutrition whose writings are the foundation of health”, succinctly put it back in the 1960s: “Eat breakfast like a king, lunch like a prince and dinner like a pauper.” George Elliot, an English novelist, poet, journalist and one of the leading writers of the Victorian era, wrote, “I like breakfast-time better than any other moment in the day.” 
 
Breakfast, around the world is, today, becoming more than a boring egg on toast, or just bread and butter. The usual bun-maska breakfast of the Indians has, today undergone a drastic change. Breakfast has now become a comforting, filling meal of the day. Breakfast, an essential part of any household, is turning out to be more tempting with quick fix and tasty options which are creating a wave in the Indian market. According to Mintel Research traditional options like milk and fruit, and savoury breakfasts like poha/upma and chapatis/roti are the most popular breakfast items, followed by eggs and vegetables. Cereal, a relatively new option with a per capita consumption lower than 0.1kg per year, showcases the opportunities for cereal manufacturers in India.

Urban youths, strapped for time and conscious of the need for a healthy breakfast are looking for convenient and quick options f r o m the traditional breakfast. They are looking for low fat and nutritious fast foods for breakfast. Brands can promote breakfast cereals as part of a balanced diet and emphasise the positive attributes of cereal, such as high fibre and wholegrain, in order to capture the attention of health-conscious consumers. There is also room to capitalise on the functional attributes of cereal like slimming and cardiovascular health.

With considerable inputs coming in f r o m nutritionists, pediatricians and cardiologists for breakfast which could sustain for hours and also provide the necessary weight control, entrepreneurs are coming up with a range of choices – f r o m simple stir cereals in milk, to oats, ready-to-cook upma, poha, etc – to satiate the appetites  of the healthy and quick breakfast seekers. To satisfy these consumers, the entrepreneurs have introduced packaged breakfast and ready-to-eat products, aimed primarily at urban middle-class as time-saving and convenient options. However, it is found that these products are also finding market in the tier II and III cities.
 
The packaged breakfast cereals market is, today, a booming business. These cereals have become an essential part of breakfast in almost all the corners of globe. According to ‘India Breakfast Cereal Market Outlook, 2022’, the breakfast cereal market has been growing with more than 17% CAGR f r o m the past five years. What were traditionally served as products of principal grains and rice that needed to be heated or cooked before being served have, with technological advances, led to the development of a variety of ready-to-eat products that need no or minimal cooking. Cereal marketers are trying to change traditional breakfast norms by increasing the level of penetration and frequency of purchase.

Market for Breakfast Cereals
 
The cereal market is, today, divided into two categories viz. hot cereals and ready-to-eat (RTE) cereals. Hot cereals include products like oats, oat bran, wheat bran and porridge whereas ready-to-eat (RTE) cold cereals include cornflakes, wheat flakes, choco flakes, muesli, etc.

The sheer variety that is possible in this space is making it an exciting market for exploration for not only new entrepreneurs but also for global players. Today’s consumer is willing to experiment in this category and hence there in an ongoing innovation and a slew of new product launches in this space. While consumers of all age groups view the nascent segment of breakfast ready-to-eat versions as nutritious and convenient, the companies marketing the varied products are seen as a market of considerable potential. 

History of Breakfast Cereals 

Incidentally, it may be mentioned, that the first form of breakfast cereals was created way back in 1863 by James Jackson. He concocted “granula”, twice-baked whole-wheat crackers, broken into small chunks. But the revolution in Western breakfasts was started by John Harvey Kellogg. The breakfast cereals’ dominance really began when Kellogg discovered in August 1894 that stale wheat dough, when forced through rollers, turned into flakes that could be toasted and eaten. Corn worked even better. By 1896 he had secured a patent for flaking cereals. Today, all kinds of cereals – flaked, puffed, shredded, frosted – have crunched in almost all countries, including India.  

Cereals’ Consumption

Despite the presence of multiple players like Kellogg’s, Quaker and Bagrry’s, among others, the per capita consumption of breakfast cereal is still very low in India compared to other developed markets. There is thus an opportunity for existing players to increase their market share and for new entrepreneurs to venture into it. 

Mordor Intelligence in its report, India Breakfast Cereals Market Growth, Trends, And Forecast (2019- 2024)” states that cereals, which have always been a major part of Indian breakfast, have a growing market in India and are expected to  grow at  CAGR of 6.50% during the forecast period (2019-2024).

In its report “Asia-Pacific breakfast Cereals Market Growth, Trends and Forecast (2018-2023) that the Asia-Pacific Breakfast Cereals Market is expected to reach USD 5.5 billion by 2023 at a CAGR of 8.1%, during the forecast period. The consumption of Breakfast Cereals has observed a faster growth during the past five year which is expected to continue.

Breakfast cereal manufacturers have used the nutritional plank as a growth strategy. According to estimates by Euromonitor International, the market size of breakfast cereals, which is an aggregation of ready-to-eat and hot cereals, stood at Rs. 25.8 billion in 2018 in terms of retail sales value. It is expected to grow only at a CAGR of 5.6 per cent till 2023.

Dilip Radhakrishna, Research Analyst-Food & Nutrition at Euromonitor International, feels the doubling of this category as snacks is one reason. He says, “Since breakfast cereals are becoming essential daily meals for most households, demand is set to increase. Along with the growing popularity of traditional Indian dishes available in hot cereals, children’s breakfast cereals will keep being favoured as snack options among many households, which will thus contribute to the overall sales growth.”

The Mordor Intelligence report discloses that Product launched with incorporating millets, ancient grains, high fiber and nutritional cereals, such as oats, chia seeds, and flaxseeds have performed well over the past five years. The demand for functional ingredients in bakery products is rising due to its nutritional benefits. In addition to functional health benefits, incorporating natural ingredients, such as natural preservatives, antioxidants, and enzymes in Breakfast Cereals are on rise. Companies are targeting to replace shortenings and fat with Omega-9, Omega 3. Cholesterol reduction, weight management, high protein and sugar control are the key consumer trend.

In this connection, it may be mentioned, for the new entrepreneurs that out-of-the-hat ideas will help one to come out with something new and delectable. Plain cornflakes found competition with new additions like honey, raisins, almonds etc. Oats are also posing competition for cornflakes.  
 
Kellogg’s India is, according to its associate vice president (marketing), Manmeet Singh, focusing on customising its products according to Indian taste and preferences to push sales. In the recent past, besides coming up with different fruity flavours of its flagship Corn Flakes, the firm launched Rose Badaam, which was tailored for the Indian palette. Besides, the company, on its website, has been offering several Indian recipes made with Corn Flakes.

Competition 

The cereal market, dominated by the multinationals, has turned highly competitive. No. 1 Kellogg’s revenue rose at 7.6 percent in the year ended March 2018, slower than the industry’s pace, mainly because of the challenge posed by the second-placed PepsiCo’s Quaker-branded cereals and oats. Even Nestle has jumped into the cereal market. Last year the Swiss packaged foods maker entered the packaged breakfast market in India with the launch of Nesplus, a brand owned by Nestlé Breakfast Cereals f r o m Cereal Partners Worldwide (CPW), a joint venture between Nestle SA and US firm General Mills. These breakfast cereals are available in four multigrain variants—Kokos, Choco-Brust Fillows, Strawberry-Burst Fillows and Nutty Honey Granola.

Retailers are of the opinion that pricing determines the demand for different brands of cereals. They state that consumers are conscious about pricing and go for options which are cheaper or offer discounts. 

According to TechSci Research, “Indian Breakfast Cereal Market by Product Type, By Pricing, By Pack Size, By Distribution Channel, By City, Competition, Forecast and opportunities 2013-2023,” Indian breakfast cereal market is controlled by these major players, namely– Kellogg India Pvt. Ltd., PepsiCo India Holdings Private Limited, Marico Ltd, Bagrry’s India Limited, GlaxoSmithKline Consumer Healthcare Ltd, Avesta Good Earth Foods Pvt Ltd, Mohan Meakin Limited, Express Foods Private Limited, Patanjali Ayurved Limited, and Kottaram Agro Foods Pvt Ltd.

The cereal manufacturers are expanding their distribution network in India which is expected to positively grow Indian breakfast cereal market in the coming years. According to TechSci North and West regions are leaders in India breakfast cereal market due to presence of cities like New Delhi, Mumbai, Pune, Ahmedabad which have large urban population base and rising working women population. Online sales channel is anticipated to emerge as the fastest growing sales channel in Indian breakfast cereal market on account of increasing consumer preference for non-store based retailing which is encouraging several manufacturers to start online web stores on their websites  

Hot Cereals

Hot cereal can take on both sweet and savoury notes, serving a dual purpose, and can be used as a breakfast item or as a side dish for dinner.

A number of hot cereals that rely on neutral or savoury flavour notes have come to market recently and there is room for more. Manufacturers could consider increasing interest in cold cereal as an afternoon snack, alongside other sweet or savoury snack foods.

Today breakfast cereals also include millet based cereals like ragi porridge, oats porridge, museli, dalia, wheat bran porridge, poha or rice flakes. Ragi is a richest source of Calcium and Iron. There are all types of grains to enjoy for breakfast such as quinoa, barley, wheat, bulgur, amaranth, kamut, buckwheat, oats, and flaxseed. What a wonderful start to your morning it would be to have a healthy glass of natural juice with a bowl of quinoa and millet porridge!

The Rs 3,000-crore breakfast market is going through a change with the urban consumers switching f r o m western cereals to traditional Indian or healthier alternatives.

Orkla Group (owned by MTR), which marketed spices to rural India, has now lined up ready-to-eat and cook options there. The company’s CEO, Sanjay Sharma, sometime back, disclosed that this segment saw of growth of 16-18 per cent in the rural sector while the urban sector registered a growth of only 8 per cent. 

Way forward

More than two decades after Kellogg Company entered India, the cereal market is worth Rs 2,579.5 crore, according to data by Euromontior International. But it’s still tiny compared with India’s Rs 5.1-lakh-crore packaged food industry. Companies like MTR Foods Pvt. Ltd. and iD Fresh Food (India) Pvt. Ltd. hope to change that, offering a range of ready-to-eat and pre-mix options. Still a nascent segment worth Rs 240 crore, according to data shared by MTR Foods, but growing at a 12 percent annualised rate. 

Sunay Bhasin, chief marketing officer at MTR Foods expects younger Indians to drive growth in the Indian breakfast market, which he has gone on record stating, will keep getting bigger with time. 

iD Fresh has found customers who love idlis and dosas but are unable to make the batter at home. These would be their first target in the region. 

However, it may be mentioned that entering this segment of the food industry is not a cakewalk. Indian families don’t usually rely on ready-to-eat or instant packaged food. At present packaged breakfast options are preferred only by individuals on-the-go. The shift for everyone to select packaged cereals as their breakfast food will take place gradually and the existing players as well as the new ones will have to nurture this market. 

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