The market is virtually static, but it remains fiercely competitive, brand led and backed by massive marketing muscle. The message is that those products that don't deliver in these areas face a shaky future. Cereals have always been perceived as a healthy option, but the signs are that people want tastier, healthy products, and manufacturers have been leaping to the challenge with new flavours and varieties. Market leader Kellogg says consumers put variety at the top of their wish list. Health comes a strong second as more consumers demand low fat, functional and fortified products. Kellogg claims all its cereals are low in fat and fortified with minerals and vitamins, and that its children's cereals now have added calcium. The demand for new flavours and varieties has sparked a raft of premium and indulgent fruity lines such as Kellogg's Special K Red Berries and Crunchy Nut Red. Red berries also feature in Jordans' newest line, Oat Sensations. Quaker has relaunched Harvest Crunch with new flavours and a higher proportion of fruit and nuts, while Weetabix has added new indulgent flavours to its Alpen muesli. The arrival of these added value and premium lines has taken the sting out of aggressive retailer promotional pricing. It remains an issue, but is one most manufacturers accept as the norm. Quaker's sales director Martin Knowles says that although EDLP has been around for a while, there is no risk of the market becoming commoditised. "Brands are extremely well recognised and with what we put behind them, there is scope for growth." Having a strong brand icon helps and Quaker's Sugar Puffs Honey Monster is instantly recognisable. Knowles says: "Sugar Puff's Honey Monster is synonymous with the brand. "We use other licences for periodic promotions but these come and go to maintain a constant level of interest and excitement. This year he fronts an on-pack promotion offering free admittance to UCI cinemas." Kellogg's UK sales director Kevin Jones believes character licences and limited editions together give a powerful offer. He says: "Limited editions help keep the cereal aisle bright and interesting. We had a highly successful Pokémon promotion, switching to caramel Coco Pops later in the year, and we are now looking at more." Dailycer introduced a host of lines in 2001, the most successful being Tweenies Letter Time, offering cereal and education in the same bowl. It says 90% of its business is own label and claims to be just behind Weetabix in terms of size. This year it is planning to add more of its own-branded varieties across its range. All the major players have new products and promotional activity lined up for 2002, but most are keeping plans close to their chest. Kellogg has a multi-million pound marketing programme for its brands. Others less coy about their spending include Weetabix which discloses that its budget for new product launches this year is £6m, while Quaker is spending more than £9m across all its brands. Jordans is concentrating activity on its conservation programmes. Business development director Ed Olphin says: "In the past year the UK has been frozen because of foot and mouth which had major implications for farming and consumers. "In April and May we will have a promotion using the strapline, Help us to help our countryside', with the Wildlife Trust, to get 22,000 new volunteers introduced to wildlife trusts via Jordans' packs." Jordans' involvement with wine expert Oz Clarke will also continue in 2002. The celebrity will front its TV ads to emphasise the brand's commitment to taste and flavour. The company's bestsellers are Country Crisp, which exceeds £10m in sales, and Crunchy, at £7.7m. And after increasing the pack size of Crunchy cereal to 750g the brand grew by 32%, it says. Last year Jordans launched a new organic line up and this year has appointed its first dedicated category manager and a category management exercise has already been completed with Sainsbury. Forging partnerships has proved to be a good way of accelerating growth in the market. Cereal Partners UK, the partnership between Nestlé and General Mills, is now in its 12th year. Its latest launch was Sporties in June. Kellogg's Jones reports its partnership with Müller yogurts has been a huge success, with sales topping £40m in 2001. "By taking Kellogg's cereal and putting it with the number one yogurt brand, you have a real winner." Kellogg has also joined forces with Food Brokers to accelerate the growth of its snack portfolio and Jones says the first indications are good and the portfolio is on track for double-digit growth. The market potential for breakfast replacement is put at £100m in the UK by industry observers. Ennis Foods believes that an increasing number of consumers are leaving home without breakfast and the company has started to grow its Rumblers brand in the chilled food-to-go sector to respond to the trend. Managing director Richard Penston says: "We envisage a breakfast aisle in supermarkets in 10 years' time, similar to the lunchtime aisle today. "Twenty years ago the idea of someone in the City going to a supermarket for a sandwich was far-fetched, now it's an every day occurrence." This month Ennis Foods is launching its first children's product into Tesco. Called Breakfastables, this cereal with fresh milk comes in appealing packs for children's lunchboxes. Penston recommends it is sold next to children's snack products such as Kraft's Lunchables. Hot cereals is one of the most buoyant sectors, achieving a value share of £58.3m, up 2.8% [TNS]. Quaker dominates with its Quaker and Scott's brands. It pioneered the sachet-based instant cereal when it launched Oatso Simple four years ago and the brand is now worth almost £9m. "There is evidence that people are looking for more convenience food and at cereals as a snack because it does not have to be cooked," says Quaker's Knowles. Rival Weetabix has grabbed at both the convenience and snacking opportunities and gone head to head with Quaker with its Ready Brek Rip, Mix and Micro microwaveable oat cereal. This comes in an assortment of flavours in single-serve sachets. Sales director Trevor Hart says: "This will appeal to older kids who will find it easy to prepare." The company is also fuelling the snacking boom by moving Weetabix Crrrunch and Minibix with Chocolate into 40g handy bags and it says the response has been good. Jordans too has moved into the microwaveable hot cereal sector with Oat Sensations and says the product represents a technological breakthrough in the way the oats are soaked in pure juices and then kiln dried to retain flavour. Jordans' Olphin says: "This product suits adult palates whereas the instant cereal is more for children." {{FOCUS SPECIALS }}