Weetabix remained number one cereal brand but growth was flat, while some Kellogg’s brands powered ahead

With campaigns such as Sainsbury’s Switch and Save, and Asda relaunching its own-label cereal with only natural ingredients, branded cereals were forced to fight back, with Kellogg’s, in particular, investing heavily in both corporate and brand-based advertising (it spent £21.6m advertising Special K alone), backed up by some well-timed PR around plans to emboss the William Kellogg signature on assorted flakes of its bestselling Corn Flakes.

The spend seems to have paid off. While own label had a strong year, with sales up 12.3% to £292m versus total category growth of 5.8% to £1.46bn, Kellogg’s brands appeared to fare better than most of its rivals, with big gains for Crunchy Nut Corn Flakes and Bran Flakes in particular.

The cereals category is a source of significant confrontation, says Phil Hancock, Asda cereal buyer. “Brands have had to spend more on promotions because there is quite a wide gap on affordability between own label and brand,” he says. “People are less brand-loyal and will have realised there isn’t that much difference.”

Mike Taylor, Kellogg’s sales director, argues brands have been more able to compete. “Consumers are looking for reassurance at this difficult time,” he says. “The benefit from cereals is they are a very good value category [but] we have reinforced that with our 10p a bowl message, and we have also put bigger packs out there with value flashes on.”

There looks like being further confrontation to come. The price of standard wheat fell from £110 per tonne in January to £105 per tonne in November on the back of a good harvest [Home Grown Cereals Authority]. And though sugar costs are still putting considerable pressure on manufacturers, with prices doubling between January and November to hit a 28-year high, the price cuts on wheat and grains need to be passed on by manufacturers, says Hancock.

“Prices have come down but there isn’t a lot of activity from manufacturers to cut their costs,” he says. “Anybody that can read a commodity graph will understand there is a saving on raw ingredients so we should see savings coming through.”

Next year suppliers and retailers will be closely monitoring shopper behaviour to see if consumers decide to become more loyal to brands again. That, says Hancock, “is the billion dollar question”.


Top launch: Paw Ridge, PepsiCo
Say 'Paw Ridge' out loud – do you see what they did there? No? Neither did some of The Grocer’s staff, but that probably says more about them than PepsiCo’s creative wording.

This new children’s porridge brand, which comes in original and honey flavours, hit shelves in August as a healthy alternative to sugary cereals and boasts a low sugar content that makes it one of the few cereals that can be advertised directly to children.


Top Products Survey 2009