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Cereal, Energy and Snack Bars - UK - February 2012

“Cereal bars are one of many markets which are perhaps failing to fully leverage this value-added angle. Satiety, energy and all-natural ingredients provide three of the potentially most lucrative attributes which resonate with cereal bar users.”

– Chris Wisson, Senior Food Analyst

Some questions answered in the report include:

  • What are the key barriers to uptake of cereal bars?
  • Should cereal bars adopt a ‘back to basics’ approach?
  • How can the market halt the outflow of users?
  • How can new formats of cereal bars drive growth?
  • What levers can cereal bars use to add value?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: UK retail value sales of cereal, energy and snack bars, by type, 2011 (est)
            • Forecast
              • Figure 2: Forecast of UK retail sales of cereal, snack and energy bars, by value, 2006-16
            • Market factors
              • Falling numbers of Brits snacking in 2011
                • Rising obesity levels see many manufacturers look to ‘better for you’ snacks…
                  • … while many consumers still look for indulgence
                    • Population changes present opportunities and threats
                      • Figure 3: Trends in the age structure of the UK population, 2006-16
                    • Low consumer confidence and rising commodity prices are potential threats
                      • Companies, brands and innovation
                        • Kellogg’s remains the leading manufacturer in the market
                          • Figure 4: Manufacturers’ estimated shares in UK retail value sales of cereal, energy and snack bars, 2011
                        • Brands dominate NPD in the active cereal bars market
                          • All-natural bars becoming more commonplace
                            • Figure 5: Product launches within the UK cereal, snack and energy bars market, by leading claims, January-November 2011
                          • Adspend falls away in 2011
                            • The consumer
                              • Three in five adults eat cereal, snack and energy bars with Special K the most commonly-eaten bar in the market
                                • Figure 6: Purchase and consumption of cereal, snack and energy bars in the last six months, by type, December 2011
                              • Cereal bars are a filling and convenient snack
                                • Figure 7: Occasions for eating cereal, snack and energy bars, December 2011
                              • Flavour and cost the most important choice factors for users
                                • Figure 8: Proportion of users ranking choice factors as featuring among their top five when buying cereal, snack and energy bars, December 2011
                              • Users remain largely enthusiastic, but scepticism starting to creep in
                                • Figure 9: User attitudes towards cereal, snack and energy bars, December 2011
                              • Cost is the main deterrent for non-users of cereal bars
                                • Figure 10: Non-user attitudes towards cereal, snack and energy bars, December 2011
                              • What we think
                              • Issues in the Market

                                  • What are the key barriers to uptake of cereal bars?
                                    • Should cereal bars adopt a ‘back to basics’ approach?
                                      • How can the market halt the outflow of users?
                                        • How can new formats of cereal bars drive growth?
                                          • What levers can cereal bars use to add value?
                                          • Future Opportunities

                                              • FSTR/HYPR
                                                • Minimize Me
                                                • Internal Market Environment

                                                  • Key points
                                                    • Falling numbers of Brits claim to snack
                                                      • Figure 11: Snacking between meals, 2009-11
                                                    • Health falls away as the desire for indulgence grows
                                                        • Figure 12: Agreement with selected lifestyle statements, 2007-11
                                                      • Rising obesity levels leads to manufacturers making snacks healthier
                                                        • Figure 13: Body mass index segments, 2007-11
                                                      • Consumers scrutinising the contents of their food less
                                                        • Figure 14: Agreement with selected lifestyle statements, 2007-11
                                                      • Cereal bars stand to gain among consumers looking to snack on the go
                                                        • Lunchboxes remain a key route to growth for cereal bars
                                                        • Broader Market Environment

                                                          • Key points
                                                            • Consumers likely to retain a cautious outlook in 2012
                                                              • Figure 15: Consumer confidence index, monthly, January 2007-January 2012
                                                            • Changing population structure creates opportunities and threats
                                                              • Figure 16: Trends in the age structure of the UK population, 2011-16
                                                            • Socio-economic changes look set to benefit the cereal bars market
                                                              • Figure 17: Changes in the adult socio-economic structure of the UK population, 2011-16
                                                            • Rising commodity prices a threat to the market
                                                            • Competitive Context

                                                              • Key points
                                                                • Cereal bars a relatively small, but growing snack market
                                                                  • Figure 18: Performance of selected markets competing with cereal, snack and energy bars, 2006-11
                                                                • Cereal bars benefit from a strong on the go positioning
                                                                  • Healthy snack categories provide stern competition…
                                                                    • Figure 19: Trends in attitudes towards selected healthy lifestyle statements, December 2008-December 2011
                                                                  • … while indulgence is also on the rise
                                                                  • Strengths and Weaknesses

                                                                    • Strengths
                                                                      • Weaknesses
                                                                      • Who’s Innovating?

                                                                        • Key points
                                                                          • Cereal bars the second most innovative snack category…
                                                                            • Figure 20: Product launches within top 10 snacking categories* by NPD as a percentage of total new launches in the UK snack market over 2008-11**
                                                                          • … with Yum Yum Bros jumping to the head of the leading innovators
                                                                              • Figure 21: Product launches within the UK cereal, snack and energy bars market, by manufacturer, January-November 2011
                                                                              • Figure 22: Product launches within the UK cereal, snack and energy bars market, own-label vs brands, 2008-11*
                                                                            • Suitability for vegetarians and no additives/preservatives grow in 2011
                                                                              • Figure 23: Product launches within the UK cereal, snack and energy bars market, by leading claims, January-November 2011
                                                                            • Key themes
                                                                              • Berry fruit cereal bars on the up
                                                                                • Chocolate dominates the flavour landscape, but fruit is on the rise…
                                                                                  • Figure 24: Leading flavour components in new cereal, snack and energy bars, 2009-11*
                                                                                • … as new flavour combinations enter the market
                                                                                  • Brands make a bid for space in kids’ lunchboxes
                                                                                    • NPD in energy bars powers ahead
                                                                                    • Market Size and Forecast

                                                                                      • Key points
                                                                                        • Market growth bounces back in 2011…
                                                                                          • Figure 25: Forecast of UK retail sales of cereal, snack and energy bars, by value, 2006-16
                                                                                        • … helped by the success of Belvita
                                                                                          • Forecast
                                                                                            • Figure 26: Forecast of UK retail sales of cereal and snack bars, by value, 2006-16
                                                                                          • Forecast methodology
                                                                                          • Segment Performance

                                                                                            • Key points
                                                                                              • Cereal/granola bars comprise half of the market
                                                                                                • Figure 27: UK retail value sales of cereal, energy and snack bars, by type, 2011 (est)
                                                                                                • Figure 28: Segment breakdown for cereal, energy and snack bars, by leading brands, 2011
                                                                                              • Cereal/granola bars make steady growth in 2011
                                                                                                • While the fruit bars segment flounders
                                                                                                  • Eat Natural dominates the nut/seed bars segment
                                                                                                    • Belvita’s entrance into the market creates a new dynamic
                                                                                                    • Market Share

                                                                                                      • Key points
                                                                                                        • Kellogg’s leads the market but is under increasing pressure
                                                                                                          • Figure 29: Manufacturers’ estimated shares in UK retail value sales of cereal, energy and snack bars, 2011
                                                                                                        • Go ahead! sales lose momentum
                                                                                                          • Figure 30: Leading brands’ shares in the cereal, energy and snack bar market, by value, 2009-11
                                                                                                        • Kellogg’s Rice Krispies Squares lead the pack of competing brands
                                                                                                          • Natural bars show robust growth
                                                                                                            • Space for smaller brands to become established in the market
                                                                                                              • Own-labels remain a small presence, but looking to grow
                                                                                                              • Companies and Products

                                                                                                                • Kellogg’s
                                                                                                                  • United Biscuits (UB)
                                                                                                                    • Mars
                                                                                                                      • Weetabix
                                                                                                                        • Kraft Foods
                                                                                                                          • General Mills (Nature Valley)
                                                                                                                            • Eat Natural
                                                                                                                              • Big Bear Group (Raisio)
                                                                                                                              • Brand Communication and Promotion

                                                                                                                                • Key points
                                                                                                                                  • Adspend set to fall in 2011
                                                                                                                                    • Figure 31: Main monitored media advertising spend in the UK cereal, snack and energy bars market, 2007-11*
                                                                                                                                    • Figure 32: Adspend: sales ratio for cereal, snack and energy bars, 2007-11
                                                                                                                                  • Kellogg’s remains dominant in terms of market adspend
                                                                                                                                    • Figure 33: Main monitored media advertising spend in the UK cereal, snack and energy bars market, by top 10 advertisers over 2007-11*
                                                                                                                                  • Rice Krispies Squares account for a third of total market adspend
                                                                                                                                    • Figure 34: Main monitored media advertising spend in the UK cereal, snack and energy bars market, by top brands over 2007-11*
                                                                                                                                  • TV continues to falling in preference for advertisers of cereal bars
                                                                                                                                    • Figure 35: Main monitored media advertising spend in the UK cereal, snack and energy bars market, by media type, 2007-11*
                                                                                                                                • Channels to Market

                                                                                                                                  • Key point
                                                                                                                                    • Grocery multiples dominate sales of cereal bars
                                                                                                                                      • Figure 36: Retail distribution of cereal, snack and energy bars, by outlet type, 2009-11
                                                                                                                                    • Smaller-scale growth in the other retail channels
                                                                                                                                    • Consumer – Usage of Cereal, Snack and Energy Bars by Type

                                                                                                                                      • Key points
                                                                                                                                        • Three in five adults eat cereal and snack bars
                                                                                                                                            • Figure 37: Purchase and consumption of cereal, snack and energy bars in the last six months, by type, December 2011
                                                                                                                                            • Figure 38: Percentage-point change of consumers who have not eaten cereal bars within the last six months, 2010 vs 2011, by demographic group
                                                                                                                                          • Special K is the most widely eaten cereal bar in 2011
                                                                                                                                            • Over a third of cereal bar users only eat one type
                                                                                                                                                • Figure 39: Repertoire of consumption of brands of cereal, snack and energy bars in the last six months, December 2011
                                                                                                                                              • The children’s snacking occasion represents a sizeable market
                                                                                                                                              • Consumer – Usage of Cereal, Snack and Energy Bars by Occasion

                                                                                                                                                • Key points
                                                                                                                                                  • Cereal bars are seen as a filling and convenient snack
                                                                                                                                                      • Figure 40: Occasions for eating cereal, snack and energy bars, December 2011
                                                                                                                                                    • Cereal bars enjoy a reasonably healthy image…
                                                                                                                                                      • ... but can also tap into the treat occasion
                                                                                                                                                        • The lunchbox occasion remains a lucrative market with growth potential
                                                                                                                                                          • Men are more likely to respond to energy/exercise benefits
                                                                                                                                                          • Consumer – Choice Factors

                                                                                                                                                            • Key points
                                                                                                                                                              • Flavour is the most important choice factor
                                                                                                                                                                  • Figure 41: Proportion of users ranking choice factors as featuring among their top five when buying cereal, snack and energy bars, December 2011
                                                                                                                                                                  • Figure 42: Choice factors when buying cereal, snack and energy bars, by rank, December 2011
                                                                                                                                                                • Flavour a key deliverable for cereal bar brands
                                                                                                                                                                  • Price and ingredient factors also feature highly
                                                                                                                                                                    • Satiety and high fruit content fare less well
                                                                                                                                                                    • Consumer – Users’ Attitudes Towards Cereal, Snack and Energy Bars

                                                                                                                                                                      • Key points
                                                                                                                                                                        • User attitudes remain enthusiastic but scepticism is also prevalent
                                                                                                                                                                          • Figure 43: User attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                        • Cost is a sticking point for a large number of users
                                                                                                                                                                          • Figure 44: Cost-related user attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                        • Six in ten users see cereal bars as a healthy snacking alternative
                                                                                                                                                                          • Figure 45: Health-related user attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                        • Flavour vs Health
                                                                                                                                                                          • Figure 46: Taste-related user attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                        • Strong enthusiasm for multipacks
                                                                                                                                                                          • Figure 47: Multipack-related user attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                        • Over a third of cereal bar users keen to try new formats and flavours
                                                                                                                                                                          • Figure 48: Newness-related user attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                      • Consumer – Non-users’ Attitudes Towards Cereal, Snack and Energy Bars

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Cost is the overriding factor deterring non-users
                                                                                                                                                                            • Figure 49: Non-user attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                          • Non-usage primarily driven by cereal bars’ expensive image
                                                                                                                                                                            • Visibility, taste and appearance also notable deterrents among non-users
                                                                                                                                                                            • Consumer – Target Groups

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Four target groups
                                                                                                                                                                                  • Figure 50: Target groups for cereal, snack and energy bars, December 2011
                                                                                                                                                                                • Indulgents (27%)
                                                                                                                                                                                  • Enthusiasts (26%)
                                                                                                                                                                                    • Simplistics (16%)
                                                                                                                                                                                      • Sceptics (31%)
                                                                                                                                                                                      • Appendix – Issues in the Market

                                                                                                                                                                                          • Figure 51: Examples of cereal bars in alternative formats in other countries
                                                                                                                                                                                      • Appendix – Internal Market Environment

                                                                                                                                                                                          • Figure 52: Snacking between meals, 2011
                                                                                                                                                                                          • Figure 53: Reasons for snacking, 2009-11
                                                                                                                                                                                          • Figure 54: Agreement with selected lifestyle statements, 2007-11
                                                                                                                                                                                          • Figure 55: Agreement with selected lifestyle statements, by demographics, 2011
                                                                                                                                                                                          • Figure 56: Agreement with selected lifestyle statements, by demographics, 2011 (continued)
                                                                                                                                                                                          • Figure 57: Agreement with selected lifestyle statements, by demographics, 2011 (continued)
                                                                                                                                                                                      • Appendix – Competitive Context

                                                                                                                                                                                          • Figure 58: Trends in attitudes towards selected healthy lifestyle statements, December 2008-December 2011
                                                                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                                                                          • Figure 59: Best and worst case forecasts for cereal, snack and energy bars, by value, 2011-16
                                                                                                                                                                                      • Appendix – Consumer – Usage of Cereal, Snack and Energy Bars by Type

                                                                                                                                                                                          • Figure 60: Purchase of cereal, snack and energy bars in the last six months, by type, by demographics, December 2011
                                                                                                                                                                                          • Figure 61: Purchase of cereal, snack and energy bars in the last six months, by type, by demographics, December 2011 (continued)
                                                                                                                                                                                          • Figure 62: Consumption of cereal, snack and energy bars in the last six months, by type, by demographics, December 2011
                                                                                                                                                                                          • Figure 63: Consumption of cereal, snack and energy bars in the last six months, by type, by demographics, December 2011 (continued)
                                                                                                                                                                                          • Figure 64: Repertoire of consumption of brands of cereal, snack and energy bars in the last six months, December 2011
                                                                                                                                                                                          • Figure 65: Repertoire of consumption of brands of cereal, snack and energy bars in the last six months, by brand, December 2011
                                                                                                                                                                                      • Appendix – Consumer – Usage of Cereal, Snack and Energy Bars by Occasion

                                                                                                                                                                                          • Figure 66: Occasions for eating cereal and snack bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 67: Occasions for eating cereal and snack bars, by demographics, December 2011 (continued)
                                                                                                                                                                                          • Figure 68: Occasions for eating cereal and snack bars, by type of bar, December 2011
                                                                                                                                                                                          • Figure 69: Occasions for eating cereal and snack bars, by type of bar, December 2011 (continued)
                                                                                                                                                                                      • Appendix – Consumer – Choice Factors

                                                                                                                                                                                          • Figure 70: Ranking of ‘Flavour’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 71: Ranking of ‘Special offer/price’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 72: Ranking of ‘Natural ingredients’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 73: Ranking of ‘High quality ingredients’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 74: Ranking of ‘Added nutritional benefits’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 75: Ranking of ‘My favourite/usual brand’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 76: Ranking of ‘Is filling’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 77: Ranking of ‘Calorie content’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                          • Figure 78: Ranking of ‘High fruit content’ when buying cereal, snack and energy bars, by demographics, December 2011
                                                                                                                                                                                      • Appendix – Consumer – User Attitudes Towards Cereal, Snack and Energy Bars

                                                                                                                                                                                          • Figure 79: User attitudes towards cereal, snack and energy bars, December 2011
                                                                                                                                                                                          • Figure 80: User attitudes towards cereal, snack and energy bars, December 2011 (continued)
                                                                                                                                                                                          • Figure 81: Agreement with the statements ‘Some brands of bars have shrunk in size recently without a reduction in price’ and ‘I would buy variety multipacks’, by demographics, December 2011
                                                                                                                                                                                          • Figure 82: Agreement with the statements ‘Cereal/snack/energy bars are a healthier alternative to other snacks’ and ‘I would be interested in cereal bars with just a few ingredients’, by demographics, December 2011
                                                                                                                                                                                          • Figure 83: Agreement with the statements ‘I would like to see a wider selection of cereal/snack/energy bars available in multipacks’ and ‘Flavour is more important to me than calorie content’, by demographics, December 2011
                                                                                                                                                                                          • Figure 84: Agreement with the statements ‘I tend to read the nutritional information before buying’ and ‘I prefer the taste of branded bars to supermarket own-label ones’, by demographics, December 2011
                                                                                                                                                                                          • Figure 85: Agreement with the statements ‘I am interested in different formats (eg cereal bites or balls)’ and ‘cereal/snack/energy bars are good value for money’, by demographics, December 2011
                                                                                                                                                                                          • Figure 86: Agreement with the statements ‘I am happy to pay more for bars made with high-quality ingredients’ and ‘I prefer cereal/snack/energy bars with more adventurous/exotic flavours/ingredients’, by demographics, December 2011
                                                                                                                                                                                      • Appendix – Consumer – Non-users’ Attitudes towards Cereal, Snack and Energy bars

                                                                                                                                                                                          • Figure 87: Proportion of non-users holding selected attitudes, December 2011
                                                                                                                                                                                          • Figure 88: Proportion of non-users holding selected attitudes, by demographics, December 2011
                                                                                                                                                                                      • Appendix – Target Groups

                                                                                                                                                                                          • Figure 89: Consumption of cereal, snack and energy bars in the last six months, by target groups, December 2011
                                                                                                                                                                                          • Figure 90: Purchase of cereal, snack and energy bars eaten in the last six months, by type, by target groups, December 2011
                                                                                                                                                                                          • Figure 91: Cereal, snack and energy bars eaten most often in the last six months, by type, by target groups, December 2011
                                                                                                                                                                                          • Figure 92: Occasions for eating cereal, snack and energy bars, by target groups, December 2011
                                                                                                                                                                                          • Figure 93: Agreement with attitudes to cereal, snack and energy bars, by target groups, December 2011
                                                                                                                                                                                          • Figure 94: Agreement with statements regarding eating habits, by target groups, December 2011

                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                      • Big Bear Limited (Fox's Confectionery)
                                                                                                                                                                                      • Comic Relief UK
                                                                                                                                                                                      • Eat Natural Limited
                                                                                                                                                                                      • General Mills Inc
                                                                                                                                                                                      • Glisten PLC
                                                                                                                                                                                      • Goldman Sachs Group, Inc., The
                                                                                                                                                                                      • Häagen-Dazs
                                                                                                                                                                                      • Kellogg Company of GB Limited
                                                                                                                                                                                      • Kraft Foods UK
                                                                                                                                                                                      • Mars Incorporated
                                                                                                                                                                                      • Metro (The)
                                                                                                                                                                                      • Nature Valley
                                                                                                                                                                                      • Ofcom
                                                                                                                                                                                      • PAI Partners
                                                                                                                                                                                      • Pepsi-Cola UK
                                                                                                                                                                                      • United Biscuits
                                                                                                                                                                                      • Waitrose
                                                                                                                                                                                      • Weetabix Ltd.

                                                                                                                                                                                      Cereal, Energy and Snack Bars - UK - February 2012

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