Feeding the force

At consumer level, retail and foodservice sales of ready-to-eat (RTE) breakfast cereals, cereal bars and oats in the 15 original members of the EU reached euro 7.2bn in 2007, having grown by an average of 3.8% per year since 2002.By volume, consumption has reached 1.9Mt, having grown by an annual average of just 1.2%. Average European consumption per person now stands at some 5kg and the market value compares with EU consumer expenditure on canned fish, butter or petfood.

However, the performance of cereals and cereal bars has varied considerably by country. While in most European countries time-pressed consumers are increasingly turning to RTE cereals for a quick and nutritious breakfast, the market in the UK has long reached a point of saturation and some small declines have been recorded. Meanwhile, it might have been thought that the health-giving properties of oats would have resulted in a significant increase in overall consumption but this has not consistently been the case. Cereal bars have, though, enjoyed high levels of growth across Europe over the same period.

Breakfast cereals​

The success of the breakfast cereal was built on a growing need for convenience, coupled with a lack of time first thing in the morning. Traditional breakfasts continue to be eroded by the need for "fast nutrition" but even breakfast cereals are not fast enough for some! For example, Sweden and the UK have the most developed breakfast cereal markets and there is now little, if any, room for further expansion. The cereal bar has provided the obvious route for speedy nutrition and this has been coupled with attempts to promote the consumption of cereals at other times of the day. Excluding Sweden and the UK though, significant growth potential remains for RTE cereals in many other European markets.

While per person consumption of breakfast cereals in Sweden averages 11kg with 7.3kg and 6.5kg respectively in the UK and Ireland, many other countries languish around the 2kg per person mark.

Average EU consumption is around 3kg per person. By country, the largest markets for all cereals (as defined) in terms of value are the UK (euro 2.8bn), Germany (euro 1.2bn) and France (euro 0.9bn). All other markets are small by comparison.

Between 2002 and 2007, by far the highest average value growth rate was seen in Greece, followed by Spain, Austria and Belgium. Average annual value growth for the EU15 as a whole was 3.8% Underperforming countries, in terms of growth, included the UK, Sweden and The Netherlands.

These performances have to be seen in the light of the EU average food consumption. Despite increasing levels of immigration, EU population has been growing slowly at just over 0.3% per year.

As population tends to be a primary driver of volume food consumption, the food market (excluding beverage) has been growing at a similar rate, although values have been growing by almost 1.4% per year. Therefore, on this basis, cereal products in general have performed particularly well.

At the same time, attempts have been made to add value to the market, which has become increasingly fragmented with the development of, among others, functional, organic and healthy variants.

This, in turn, has allowed in smaller, specialist brands, especially in the health and muesli sectors.

Main trends:

• Fruits and flavour 'pieces'

• More complex formulations

• Healthier/prebiotic/probiotic/synbiotic/omega-3

• Organic and Fairtrade

• Wellness and functional products

• On-the-move breakfasts

• Cereal and energy bars

Cereal bars​

One of the fastest food industry growth rates in recent years has been enjoyed by cereal and energy bars. Today there are many types available for use either as breakfast or meal replacements, snacking, for energy, isotonic or body-building.

Significant further growth can be expected, although not at quite the rate of the last five years.

Main trends:

• Wider acceptance and usage by all age groups

• Fruits and flavour 'pieces'

• More complex formulations

• Healthier/low-fat/low sugar/gluten-free/prebiotic/synbiotic

• Organic and Fairtrade

• Wellness and functional products.

Oats​

According to figures from the Food and Agriculture Organisation, the usage of food oats has hardly moved in recent years although intervening years do show some wide variation in usage.

Several years ago oats were being hailed as the new superfood, being capable of aiding digestion and reducing cholesterol.

Rather than being used more extensively on their own, there has been increased usage in the form of instant products or where oats have been combined with other ingredients to make muesli and/or "cluster" cereal products.

Future for cereal products​

Our analyses indicate that, excluding the UK, Sweden and Germany, there is plenty of market potential for the growth in sales and consumption of cereal products, particularly RTE breakfast cereals.

Meanwhile, cereal bar sales should continue to outperform the other sectors of this market for the reasons highlighted.

Oat usage will increase but this will be mostly in the form of composite or convenience products.

The cereal bar is especially adaptable to changing needs. It can be healthy, nutritious and "portable". Many different ingredients can also be added to widen appeal and boost nutrition.

Recent developments have included organic bars and "healthier" bars suitable for children's snacks. Kellogg has been particularly active with new Nutri-Grain Fruit and Nut variants, Special K Minis (calorie counted) and an All Bran bar.

The key drivers for cereals are:

• Convenience

• Nutrition

• Health

• Products for anytime snacking and on-the-move eating

• Added ingredients and superfoods

• Flavour

For more details contact Jamie Rice at RTS Resource on +44 (0)1902 422282. wnzvr.evpr@egf-erfbhepr.pbz​ For market reports go to: http://www.foodmarket reports.com​ or log on to http://www.rts-resource.com​​