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Cereal and Snack Bars - US - March 2010

The cereal and snack bar segment has posted strong performance over the last five years, with sales increasing nearly 50% behind a flurry of new product activity that peaked in 2007. Since that time things have cooled off considerably. The total number of new product launches is down, and sales growth has flattened out. Still, the category remains highly competitive and successful brands are focusing on a few key themes to win market share. Health and wellness, natural/organic ingredients and indulgent taste experiences are platforms that continue to hold potential for both leading brands and new entries.

This report examines how all of these issues and trends are impacting the cereal and snack bar market, as well as providing:

  • An assessment of the snacking competition that cereal and snack bars face from outside the category
  • A look at how key category themes come to life in advertising and promotions
  • An analysis of three relative newcomers that have emerged as category leaders and continue to reshape the category: Special K, Fiber One and Kashi
  • An overview of new product activity from a variety of competitors
  • An exploration of consumer attitudes and behaviors regarding cereal and snack bars, as well as closely related energy/nutrition bars and diet bars

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Market at a glance: Momentum lost
                        • So many healthy snacks…
                          • Cereal wars spill over
                            • Private label ready to rise?
                              • Supermarkets dominate sales
                                • Nature Valley and Quaker Chewy maintain share lead in granola bars
                                  • Kellogg portfolio tops in cereal bars
                                    • New product launches ease off in 2008-09
                                      • Ad spending for some brands extends beyond category
                                        • Category usage shows signs of slipping
                                        • Insights and Opportunities

                                          • Raw ambition
                                            • Connecting with kids
                                              • The private-label opportunity (or threat)
                                                  • Figure 1: Top flavors for new product launches in snack/cereal/energy bars, 2008-10*
                                              • Inspire Insights

                                                  • Trend 1: Make My Cereal (bar) for Me
                                                    • If granola’s already at it…
                                                      • …then bars shouldn’t be far behind
                                                        • But where could it go next?
                                                          • Trend 2: Sporting Nutrition for the Pros
                                                            • What’s good for the pros…
                                                              • …should be good for the fans
                                                                • Trend 3: Recession Leads to More Snack Breaks
                                                                • Market Size and Forecast

                                                                  • Key points
                                                                    • What’s next?
                                                                      • Total sales and forecast
                                                                        • Figure 2: FDMx sales of cereal bars and granola bars, at current prices, 2004-14
                                                                        • Figure 3: FDMx sales of cereal bars and granola bars, at inflation-adjusted prices*, 2004-14
                                                                      • Walmart sales
                                                                      • Competitive Context

                                                                        • So many healthy snacks…
                                                                          • Figure 4: FDMx sales of healthy snack foods, by segment, 2006 and 2008
                                                                        • Nutrition/energy bars
                                                                          • Yogurt
                                                                            • Trail Mix
                                                                              • Kid snacking options
                                                                                • Figure 5: Healthy foods eaten as snacks—6-12 year olds, December 2007
                                                                              • The rich get richer
                                                                                • Cereal wars spill over
                                                                                  • Private label ready to rise?
                                                                                    • Figure 6: FDMx private-label market share of cereal bars and granola bars, by segment, 2005-09
                                                                                • Segment Performance

                                                                                  • Key points—slowdown in growth impacts both key segments
                                                                                    • Sales of cereal bars and granola bars, by segment
                                                                                      • Figure 7: FDMx sales of cereal bars and granola bars, by type, 2008 and 2009
                                                                                  • Segment Performance—Granola Bars

                                                                                    • Key points
                                                                                      • New product activity peaked in 2007 then faded
                                                                                        • Fiber wins share in 2009, but doesn’t drive total segment
                                                                                          • Sales and forecast of granola bars
                                                                                            • Figure 8: FDMx sales of granola bars, at current prices, 2004-14
                                                                                        • Segment Performance—Breakfast/Cereal/Snack Bars

                                                                                          • Key points
                                                                                            • Evolving and maturing
                                                                                              • Sales and forecast of breakfast/cereal/snack bars
                                                                                                • Figure 9: FDMx sales of breakfast/cereal/snack bars, at current prices, 2004-14
                                                                                            • Segment Performance—Other Snack Bars

                                                                                              • Key points
                                                                                                • Greater potential for specialized bars
                                                                                                  • Sales and forecast of other snack bars
                                                                                                    • Figure 10: FDMx sales of other snack bars, at current prices, 2004-14
                                                                                                • Retail Channels

                                                                                                  • Key points
                                                                                                    • A category well suited to a variety of retail channels
                                                                                                      • Sales of cereal and snack bars, by channel
                                                                                                        • Figure 11: FDMx sales of cereal and snack bars, by retail channel, 2008 and 2009
                                                                                                    • Retail Channels—Supermarkets

                                                                                                      • Key points
                                                                                                        • Supermarkets maintain competitive stance, stop share losses
                                                                                                          • Sales of cereal and snack bars at supermarkets
                                                                                                            • Figure 12: U.S. sales of cereal and snack bars at supermarkets, 2004-09
                                                                                                        • Retail Channels—Drug Stores and Mass

                                                                                                          • Key points
                                                                                                            • Target drives increased food sales
                                                                                                              • Drug channel builds on health and wellness
                                                                                                                • Sales of cereal and snack bars at drug stores and mass merchandisers
                                                                                                                  • Figure 13: U.S. sales of cereal and snack bars at drug stores and mass merchandisers*, 2004-09
                                                                                                              • Retail Channels—Natural Supermarkets

                                                                                                                • Sales of cereal and snack bars in the natural channel
                                                                                                                  • Figure 14: Natural supermarket sales of cereal and snack bars, at current prices, 2007-09
                                                                                                                • Implications
                                                                                                                  • Manufacturer and brand sales of cereal and snack bars in natural supermarkets
                                                                                                                    • Figure 15: Manufacturer brand natural supermarket sales of cereal and snack bars, 2007 and 2009
                                                                                                                  • Natural channel sales of cereal and snack bars by organic/non-organic
                                                                                                                    • Figure 16: Natural supermarket sales of cereal and snack bars, by organic vs. non-organic, 2007 and 2009
                                                                                                                  • Natural channel sales of cereal and snack bars by gluten-free
                                                                                                                    • Figure 17: Natural supermarket sales of cereal and snack bars, by gluten-free/not gluten-free, 2007 and 2009
                                                                                                                • Market Drivers

                                                                                                                  • Interest in healthy eating
                                                                                                                    • Figure 18: Attitudes towards healthy eating, 2004 and 2008
                                                                                                                  • Obesity a cause for concern
                                                                                                                    • Figure 19: Percentage of population aged 20 and over who are overweight or obese or extremely obese, 1988-2006
                                                                                                                  • Price impact
                                                                                                                    • Figure 20: FDMx sales of cereal and snack bars, change in dollar sales and volume sales, and effective inflation rate, 2006-09
                                                                                                                  • It’s the economy…
                                                                                                                    • Figure 21: Changes in bar purchasing, December 2009
                                                                                                                • Leading Companies

                                                                                                                  • Key points
                                                                                                                    • General Mills
                                                                                                                      • Kellogg
                                                                                                                        • Summary of manufacturer sales
                                                                                                                          • Figure 22: FDMx sales of leading cereal bar and granola bar manufacturers in the U.S., 2008 and 2009
                                                                                                                      • Brand Share—Granola Bars

                                                                                                                        • Key points
                                                                                                                          • Making a healthy image even healthier
                                                                                                                            • Making healthy tastier
                                                                                                                              • Manufacturer and brand sales of granola bars
                                                                                                                                • Figure 23: Selected manufacturer and brand sales of granola bars, 2008 and 2009
                                                                                                                            • Brand Share—Breakfast/Cereal/Snack Bars

                                                                                                                              • Key points
                                                                                                                                • The big get bigger
                                                                                                                                  • Healthy, natural and tasty line extensions build share at the margins
                                                                                                                                    • Manufacturer and brand sales of breakfast/cereal/snack bars
                                                                                                                                      • Figure 24: Selected manufacturer and brand sales of breakfast/cereal/snack bars, 2008 and 2009
                                                                                                                                  • Brand Share—Other Snack Bars

                                                                                                                                    • Key points
                                                                                                                                      • A diverse collection of specialized products and emerging trends
                                                                                                                                        • Manufacturer and brand sales of other snack bars
                                                                                                                                          • Figure 25: Selected manufacturer and brand sales of other snack bars, 2008 and 2009
                                                                                                                                      • Brand Qualities

                                                                                                                                        • Brand invaders
                                                                                                                                          • Figure 26: FDMx sales and overall category market share of select cereal and snack bar brands, 2005 and 2009
                                                                                                                                        • Fiber One
                                                                                                                                          • Special K
                                                                                                                                            • Kashi
                                                                                                                                            • Innovation and Innovators

                                                                                                                                              • What’s new?
                                                                                                                                                • Figure 27: Cereal and snack bar new product launches, 2005-09
                                                                                                                                              • Recent new launches concentrate on wellness, natural/organic, taste
                                                                                                                                                • Wellness/functional
                                                                                                                                                  • All-natural, organic and beyond
                                                                                                                                                    • Indulgence and taste
                                                                                                                                                    • Advertising and Promotion

                                                                                                                                                      • Overview
                                                                                                                                                        • Figure 28: Advertising spending of selected cereal and snack bar brands, 2007 and 2008
                                                                                                                                                      • Better-for-you energy a starting point for most advertising
                                                                                                                                                        • A chewy energy boost to power kids through a busy day
                                                                                                                                                          • Figure 29: Quaker Chewy Bars, television ad, 2009
                                                                                                                                                        • Nutri-Grain promises to get grownups off to a better start
                                                                                                                                                          • Figure 30: Nutri-Grain, television ad, 2009
                                                                                                                                                        • Fiber One appeals to tastebuds
                                                                                                                                                          • Figure 31: Fiber One Bars, television ad, 2009
                                                                                                                                                        • Kellogg’s Fiber Plus “plusses things up”
                                                                                                                                                          • Figure 32: Fiber Plus, television ad, 2009
                                                                                                                                                        • Nature Valley pushes harder on natural lifestyle
                                                                                                                                                          • Figure 33: Nature Valley Granola Bars, television ad, 2010
                                                                                                                                                        • Employees deliver natural message for Kashi
                                                                                                                                                          • Figure 34: Kashi, television ad, 2009
                                                                                                                                                      • Usage Trends—Cereal, Breakfast, Nutrition/Protein, Bars or Granola Bars

                                                                                                                                                        • Key points
                                                                                                                                                          • Usage of bars widespread, but showing signs of decline
                                                                                                                                                            • Demographic trends in usage
                                                                                                                                                              • Figure 35: Incidence of adult consumption of cereal/granola/energy bars, by gender, age, household income, race/Hispanic origin and presence of children, 2007-09
                                                                                                                                                            • Longer-term trend in usage is up
                                                                                                                                                              • Figure 36: Incidence of adult consumption of cereal/granola/energy bars, by type of bar, 2002-2008/09
                                                                                                                                                            • Sharpest declines among diet bars
                                                                                                                                                              • Figure 37: Incidence of cereal/granola bar consumption, among bar eaters, by type of bar, 2007-09
                                                                                                                                                          • How, When, and Why Various Types of Bars are Used

                                                                                                                                                            • Key points
                                                                                                                                                              • Reasons for use: What’s similar among different types of bars
                                                                                                                                                                • Reasons for use: What’s different
                                                                                                                                                                    • Figure 38: Reasons for eating granola bars, cereal/breakfast bars energy/protein bars, and diet bars, December 2009
                                                                                                                                                                  • Meal replacers most likely to replace breakfast and lunch
                                                                                                                                                                    • Figure 39: Granola bar, cereal/breakfast bar, energy/protein bar, and diet bar usage, type of bar, by daypart, December 2009
                                                                                                                                                                  • Flavor a top consideration in brand selection, followed by cost
                                                                                                                                                                      • Figure 40: Factors influencing granola bar, cereal/breakfast bar, energy/protein bar, and diet bar purchase, by type of bar, December 2009
                                                                                                                                                                  • Who Eats Various Types of Bars?

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Cereal/breakfast, granola bars popular with both men and women
                                                                                                                                                                        • Figure 41: Types of bars eaten, by gender, December 2009
                                                                                                                                                                      • Energy/protein bars and diet bars appeal to younger adults
                                                                                                                                                                        • Figure 42: Types of bars eaten, by age, December 2009
                                                                                                                                                                      • Little income skew for granola bars and cereal/breakfast bars
                                                                                                                                                                        • Figure 43: Types of bars eaten, by household income, December 2009
                                                                                                                                                                      • Households with more kids use more types of bars
                                                                                                                                                                        • Figure 44: Types of bars eaten, by presence and number of children, December 2009
                                                                                                                                                                    • Reasons to Eat Cereal/Breakfast Bars and Granola Bars

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Cereal bars: Snacking and convenience first, nutrition second
                                                                                                                                                                            • Figure 45: Reasons to eat cereal/breakfast bars, by gender, December 2009
                                                                                                                                                                          • Granola bars
                                                                                                                                                                            • Figure 46: Reasons to eat granola bars, by gender, December 2009
                                                                                                                                                                        • Factors Influencing Brand Selection

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Cereal/breakfast bars
                                                                                                                                                                              • Figure 47: Factors influencing cereal/breakfast bar purchase, by gender, December 2009
                                                                                                                                                                            • Older adults look for whole grains, fiber, low sodium
                                                                                                                                                                              • Figure 48: Factors influencing cereal/breakfast bar purchase, by age, December 2009
                                                                                                                                                                            • Granola bars
                                                                                                                                                                              • Figure 49: Factors influencing granola bar purchase, by gender, December 2009
                                                                                                                                                                              • Figure 50: Factors influencing granola bar purchase, by age, December 2009
                                                                                                                                                                          • Changes in Bar Purchasing and Impact of Cause Marketing/Environmental Positioning

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Signs of increased economizing in bar purchases
                                                                                                                                                                                • Untapped potential in private label?
                                                                                                                                                                                  • Figure 51: Changes in bar purchasing, by gender, December 2009
                                                                                                                                                                                  • Figure 52: Changes in bar purchasing, by age, December 2009
                                                                                                                                                                                  • Figure 53: Changes in bar purchasing, by household income, December 2009
                                                                                                                                                                                • Cause marketing and environmental positionings hold potential
                                                                                                                                                                                  • Figure 54: Interest in cause marketing and environmental positioning when buying bars, by age, December 2009
                                                                                                                                                                                  • Figure 55: Interest in cause marketing and environmental positioning when buying bars, by household income, December 2009
                                                                                                                                                                              • Impact of Race and Hispanic Origin

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Reasons to eat cereal/breakfast bars and granola bars
                                                                                                                                                                                    • Black respondents more likely to value nutritional benefits
                                                                                                                                                                                      • Figure 56: Reasons to eat cereal/breakfast bars, by race/Hispanic origin, December 2009
                                                                                                                                                                                      • Figure 57: Reasons to eat granola bars, by race/Hispanic origin, December 2009
                                                                                                                                                                                    • Factors influencing brand selection
                                                                                                                                                                                      • Figure 58: Factors influencing cereal/breakfast bar purchase, by race/Hispanic origin, December 2009
                                                                                                                                                                                      • Figure 59: Factors influencing granola bar purchase, by race/Hispanic origin, December 2009
                                                                                                                                                                                  • Cluster Analysis

                                                                                                                                                                                      • Flavorful snackers
                                                                                                                                                                                        • Demographics
                                                                                                                                                                                          • Characteristics:
                                                                                                                                                                                            • Opportunities
                                                                                                                                                                                              • Not at my job
                                                                                                                                                                                                • Demographics
                                                                                                                                                                                                  • Characteristics:
                                                                                                                                                                                                    • Opportunities
                                                                                                                                                                                                      • Other bars
                                                                                                                                                                                                        • Demographics
                                                                                                                                                                                                          • Characteristics:
                                                                                                                                                                                                            • Opportunities
                                                                                                                                                                                                              • Cluster characteristics
                                                                                                                                                                                                                • Figure 60: Cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 61: Types of bars eaten, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 62: Reasons for using cereal or breakfast bars, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 63: Reasons for using granola bars, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 64: Factors influencing cereal/breakfast bar purchase, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 65: Factors influencing granola bar purchase, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 66: Changes in bar purchasing, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                                • Figure 67: Interest in cause marketing and environmental positioning when buying bars, by cereal, breakfast and granola bars clusters, December 2009
                                                                                                                                                                                                              • Cluster demographics
                                                                                                                                                                                                                • Figure 68: Cereal, breakfast and granola bars clusters, by gender, December 2009
                                                                                                                                                                                                                • Figure 69: Cereal, breakfast and granola bars clusters, by age, December 2009
                                                                                                                                                                                                                • Figure 70: Cereal, breakfast and granola bars clusters, by household income, December 2009
                                                                                                                                                                                                                • Figure 71: Cereal, breakfast and granola bars clusters, by race, December 2009
                                                                                                                                                                                                                • Figure 72: Cereal, breakfast and granola bars clusters, by Hispanic origin, December 2009
                                                                                                                                                                                                              • Cluster methodology
                                                                                                                                                                                                              • IRI/Builders—Key Household Purchase Measures

                                                                                                                                                                                                                  • Overview of snack/granola bars
                                                                                                                                                                                                                    • Granola bars
                                                                                                                                                                                                                      • Consumer insights on key purchase measures—granola bars
                                                                                                                                                                                                                        • Brand map
                                                                                                                                                                                                                          • Figure 73: Brand map, selected brands of granola bars, buying rate, by household penetration, 2009*
                                                                                                                                                                                                                        • Brand leader characteristics
                                                                                                                                                                                                                          • Key purchase measures
                                                                                                                                                                                                                            • Figure 74: Key purchase measures for the top brands of granola bars, by household penetration, 2009*
                                                                                                                                                                                                                          • Breakfast/cereal/snack bars
                                                                                                                                                                                                                            • Consumer insights on key purchase measures—breakfast/cereal/snack bars
                                                                                                                                                                                                                              • Brand map
                                                                                                                                                                                                                                • Figure 75: Brand map, selected brands of breakfast/cereal/snack bars, buying rate, by household penetration, 2009*
                                                                                                                                                                                                                              • Brand leader characteristics
                                                                                                                                                                                                                                • Key purchase measures
                                                                                                                                                                                                                                  • Figure 76: Key purchase measures for the top brands of breakfast/cereal/snack bars, by household penetration, 2009*
                                                                                                                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                                • Reasons for eating
                                                                                                                                                                                                                                  • Figure 77: Reasons to eat cereal/breakfast bars, by age, December 2009
                                                                                                                                                                                                                                  • Figure 78: Reasons to eat cereal/breakfast bars, by household income, December 2009
                                                                                                                                                                                                                                  • Figure 79: Reasons to eat granola bars, by age, December 2009
                                                                                                                                                                                                                                  • Figure 80: Reasons to eat granola bars, by household income, December 2009
                                                                                                                                                                                                                                • Factors influencing purchase
                                                                                                                                                                                                                                  • Figure 81: Factors influencing cereal/breakfast bar purchase, by household income, December 2009
                                                                                                                                                                                                                                  • Figure 82: Factors influencing energy/protein bar purchase, by gender, December 2009
                                                                                                                                                                                                                                • Interest in cause marketing and environmental positioning
                                                                                                                                                                                                                                  • Figure 83: Interest in cause marketing and environmental positioning when buying bars, by gender, December 2009
                                                                                                                                                                                                                              • Appendix: Trade Associations

                                                                                                                                                                                                                                Companies Covered

                                                                                                                                                                                                                                • American Association of Candy Technologists (AACT)
                                                                                                                                                                                                                                • American Nutraceutical Association (ANA)
                                                                                                                                                                                                                                • Atkins Nutritionals, Inc.
                                                                                                                                                                                                                                • Barbara's Bakery Inc.
                                                                                                                                                                                                                                • Chocolate Manufacturers Association
                                                                                                                                                                                                                                • Clif Bar Inc.
                                                                                                                                                                                                                                • Confectionery Manufacturers Association of Canada (CMAC)
                                                                                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                                                                                • General Mills Inc
                                                                                                                                                                                                                                • Greenfield Online
                                                                                                                                                                                                                                • Joyva Corp
                                                                                                                                                                                                                                • Kashi Co. Inc.
                                                                                                                                                                                                                                • Kellogg Company
                                                                                                                                                                                                                                • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                                • Major League Baseball
                                                                                                                                                                                                                                • McKee Foods Corporation
                                                                                                                                                                                                                                • McNeil Consumer Nutritionals UK Ltd
                                                                                                                                                                                                                                • Met-Rx Engineered Nutrition
                                                                                                                                                                                                                                • National Association of Chewing Gum Manufacturers (NACGM)
                                                                                                                                                                                                                                • National Confectionery Sales Association (NCSA)
                                                                                                                                                                                                                                • National Public Radio Inc.
                                                                                                                                                                                                                                • Nature Valley
                                                                                                                                                                                                                                • Nature's Path Foods Inc
                                                                                                                                                                                                                                • Nike
                                                                                                                                                                                                                                • Odwalla Inc.
                                                                                                                                                                                                                                • PepsiCo Inc
                                                                                                                                                                                                                                • PMCA
                                                                                                                                                                                                                                • PowerBar Inc.
                                                                                                                                                                                                                                • Quaker
                                                                                                                                                                                                                                • Retail Confectioners International
                                                                                                                                                                                                                                • Slim-Fast Foods Company
                                                                                                                                                                                                                                • Small Planet Foods Inc. (Cascadian Farms)
                                                                                                                                                                                                                                • Target Corporation
                                                                                                                                                                                                                                • The Hain Celestial Group, Inc.
                                                                                                                                                                                                                                • The National Confectioners Association of the U.S. (NCA)
                                                                                                                                                                                                                                • Trader Joe's Company Inc
                                                                                                                                                                                                                                • U.S. Bureau of the Census
                                                                                                                                                                                                                                • U.S. Department of Agriculture
                                                                                                                                                                                                                                • Walmart Stores (USA)
                                                                                                                                                                                                                                • Weetabix Ltd.
                                                                                                                                                                                                                                • Whole Foods Market Inc
                                                                                                                                                                                                                                • Yoplait USA

                                                                                                                                                                                                                                Cereal and Snack Bars - US - March 2010

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