Kantar Worldpanel - www.kantarworldpanel.com

The next breakfast icon: Cereal?


In the recent years in China there is increasing attention on health oriented categories. Against the backdrop an FMCG growth slowdown the cereal category with multiple health functions and low calories still enjoys fast growth. Breakfast cereal is the sub category with the fastest growth within cereal.

Chinese waking up to a new routine

Breakfast Cereal is one kind of “Ready To Eat” product which is different from traditional oatmeal prepared by cooking or mixing with boiling water or milk. Breakfast cereal has already been a popular food in North American and European market for decades and is a staple of children and adults’ daily routine, but it previously has been seldom tried by Chinese families. As with many other western food traditions, breakfast cereals are gradually being accepted into more and more Chinese homes. A number of factors have led to this change and attracted young consumers; manufacturer activity through new launches and media is one alongside the increased availability of imported products through online and overseas channels. According to Kantar Worldpanel’s research, the sales performance of breakfast cereal experienced a dramatic growth in recent three years.

From the view of channel, hypermarket is still playing the leading role in breakfast cereal’s business. Hypermarket is very capable of helping a new brand to penetrate in its initial stage of distribution. That is why hypermarket has always been prioritized when manufactures started entering into this market and are looking to begin their investment. Imported products via ecommerce and overseas purchase as also enabled the category to reach a wider audience. Breakfast cereal is also being given as gifts. Kantar Worldpanel discovered that the proportion of gifting in breakfast cereal market reached up to 25% of total volume received in the home, especially in the first-tier cities. Considering breakfast cereal’s imported and premium image, its great potential in gifting market should not be overlooked.

Super hero of breakfast cereal

CALBEE, a Japanese cereal brand has been a key player in the growth of the overall category and swept into China’s market in 2015. Although this brand is not officially distributed in modern channels such as hypermarket and supermarket, it has doubled the sales of breakfast cereal category in China’s market merely through online shopping and overseas purchasing. CALBEE’s successful experience not only proves the great potential of e-commerce, and also shows the diversified demands of consumers. CALBEE’s price is triple than other oatmeal demonstrating that Chinese consumers are willing to pay more for a high-quality product. Calbee’s penetration has reached 1.7% in cities KeyA-D in only one year and most of Calbee buyers are new category buyers.

Market future belongs to the young

Chinese people have many choices in their breakfast table. It is not easy to take on adult breakfast market because their preference of deciding what to eat in the morning can be hard to change as it is a routine led occasion. They key battleground for several breakfast cereal companies is in targeting families with children of school age. Following a well-established pattern from the West, manufacturers are often linking packaging and marketing with cartoon characters and children’s products. CALBEE is a successful example of reaching outside the kids-only market to accelerate growth. From advertisement to pack cover, they do not rely on only selling a cartoon image, but highlight that consumers can mix cereal with yoghurt. This brings unique and fresh experience for those eating the product. The popularity of Japanese travel has also helped with CALBEE’s image as the brand has become a ‘must-buy’ purchase to bring back from Japan. The sales and additional boost to image from overseas purchasing wave has helped Calbee open a new market for young adults.

Opportunities and Challenges

Breakfast cereal has a more diverse product range than traditional oats. It has great potential to innovate with opportunities in terms of flavor, packaging, and ways to consume it. The consumer perception of cereal has moved beyond just corn flakes and cocoa balls and there is increasing awareness of products launched recently such as Granola – mixing oatmeal with dried fruit and honey, or Muesli – an assorted food with oatmeal, corn flakes, nut, and seeds.

Although breakfast cereal market grows rapidly, the current size of China’s market is small and sales are concentrated only in first-tier cities. As a category with only 5.9% penetration, breakfast cereal has a lot of potential headroom for growth, especially when compared to some western markets. Driving penetration will always be a vital mission and also a big challenge. Nowadays, young generation is embracing a healthier, convenient, fashionable, and unique life. Creating innovation based on young generation’s need is undoubtedly the key for a cereal brand to win the battle for breakfast.

The next breakfast icon: Cereal?

The next breakfast icon: Cereal?

Get in touch

Jason Yu
General Manager in China


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