Bring Breakfast Back

As a whole, the shelf-stable breakfast foods segment is down. But retailers that focus on unique items — and stress quality, nutrition and convenience — will win on the store brand side.

A good, hardy breakfast helps us start the day off right. As the first meal of the day, it also is our first opportunity to make smart and healthy nutritional choices for the whole family.

Finding the time, however, for a proper morning meal is challenging. For that reason, quick, convenient and healthful breakfast options are in demand. And private label shelf-stable breakfast foods such as cereal, toaster pastries, breakfast bars and bagels make for an easy option that also is affordable.

But the modest gains the segment made during the height of the recession have slowed down or stalled altogether — even though the recovery continues to limp along.

Hot and cold

According to data from The Nielsen Co., New York, store brand ready-to-eat cereal, in particular, is hurting. Dollar sales fell by almost 7 percent during the 52 weeks ending Jan. 22 (food, drug and mass merchandiser stores, including Walmart), while unit sales declined 8.3 percent.

Private label cereal has certainly taken a beating, especially from the two major name brand manufacturers — Kellogg's and General Mills — which account for nearly two-thirds of the cold cereal segment. According to "Private Label Cereal — US," a July 2010 report from global market research firm Mintel International, store brands risk losing their price advantage as name brands hold steady with pricing and use their marketing strength to offer coupons and other promotions.

Retailers need to use every tool in their marketing arsenal to hold their own — and come back strong.

"There is an opportunity for retailers to evolve and grow their brands within the segment by developing their brands with increased marketing muscle," says Jennifer Becker, brand manager, store brands marketing for ConAgra Foods, Omaha, Neb. "Retailers who utilize traditional marketing levers such as well-designed packaging, product innovation and promotional tactics will grow the overall category and their share within."

Consumer use of social media and mobile devices presents another viable promotional idea that could help nudge the total category in the right direction as well, says Shawn McGreevy, director of business development for St. Paul, Minn.-based National Choice Bakery.

"For example," he explains, "targeting messaging or special offers via mobile devices to parents who shop at 'X' time will grab their attention 'on the spot' and move them to drop that item in their shopping cart."

While technology brings new ways to communicate to consumers, retailers would be wise to avoid "straying too far from traditional expectations of consumers or ... risk losing precious market share," McGreevy notes. And what consumers want in the shelf-stable breakfast food aisles are convenient and healthy products featuring whole grains, flavor variety and functional ingredients.

"Health and wellness concerns drive consumers to read labels and steer clear of products that are full of negative' ingredients," Becker explains. "There is benefit for both branded and store brand items to clearly communicate nutritional benefits and claims on the front of the package."

Among the best store brand opportunities within the shelf-stable breakfast foods segment are "healthy products with child appeal and taste, packaged with innovative concepts for a busy consumer lifestyle," McGreevy says.

These products should meet the demands of "on-the-go parents who need nutritional, yet easy options to feed their family," he adds. "Convenience, value and flavor should not be underestimated."

Do put some "marketing muscle" behind store brand shelf-stable breakfast items.

Don't just copy the national brands; offer flavor and other innovations within the breakfast bars and cereal categories.

Do play up the most relevant health attributes on store brand breakfast packaging.

Be unique

Because shelf-stable breakfast foods — especially cereal — represent a high-volume segment, retailers could consider rolling out unique formulations to draw in foot traffic.

"Everyone has the same brands and national brand equivalents," says Tom Lonsway, vice president of sales and marketing for San Dimas, Calif.-based Organic Milling, "but unique items that are reasonably priced and only found at a specific store can shift where [consumers decide] to make a particular shopping visit."

He points to the success experienced by retailers such as Trader Joe's, Whole Foods, Target and Fresh & Easy, but admits that the advice is most relevant for the healthier/natural cereals. Offering cereal in smart and easy-to-use packaging such as oval canisters and stand-up resealable zip bags also can help differentiate cereal offerings.

Retailers also should carefully consider which health attributes to play up when rolling out store brand healthful/natural cereals — and where such products are positioned within the store — to maximize the upsell.

Shelf-Stable Breakfast Food Performance

Lonsway feels that some retailers have mistakenly tried to make gluten-free a "reason for being" — placing such products in designated sets instead of integrating the items within a particular category. By integrating those products — with gluten-free as a called-out benefit — retailers could shift a purchasing decision while the consumer is shopping, for example, in the cereal section.

Breakfast bars

The popularity of breakfast bars has grown in recent years as a convenient way to manage breakfast while on the run — at various times throughout the day. Nielsen data reveal that private label cereal bars saw a 6.8 percent dollar sales increase over the 52 weeks ending Jan. 22, reaching just more than $61 million. Store brand granola/yogurt bars saw an even greater jump, posting a 14.0 percent dollar sales gain.

"With an ever-changing lifestyle, consumers no longer view breakfast as just a 'morning' meal," McGreevy notes. "There is an evolving demand for all-day breakfast items ... that are consumed anytime or as snacks in between meals."

According to "Cereal and Snack Bars — US," a March 2010 report from Mintel, the cereal bar segment has become more narrowly focused on health and weight management over the last five years. Cereal bars also have far broader user bases than energy/protein bars or diet bars, with many users pointing to snacking as reasons for eating. Given consumers' strong interest in flavor and flavor variety in the category, opportunities to grow private label share abound. The report stresses that retailers should offer more than just copies of national brand products as a fundamental way to build trial and sustain loyalty.

McGreevy agrees. "The breakfast category is an ever-growing array of convenient, creative and 'better-for-you products," he says. "To gain market share, products must not only react to changes, but brands will demand proactive innovation to capture 'niche' needs to be ahead of new consumer waves. The future leaders of each category must plot a formula of quality and price along with integration of consumer needs or demands."

Pancake mixes

Although weekday mornings often involve a mad dash out the door, weekend mornings are a bit slower — and a great time to sit and enjoy a full breakfast. Using a shelf-stable mix to make pancakes and waffles at home is not only easy, it also is a smart way to save money in comparison to restaurant fare.

But growth within the pancake mix segment remains flat. Future growth will require retailers and manufacturers to retain current users with targeted advertising and promotional efforts, according to "Baking and Dessert Mixes — US," a January 2011 report from Mintel.

Don't forget to remind consumers that store brand pancake mixes make a hot, hearty breakfast easy and affordable.

Watch the gap

Shelf-stable breakfast foods are an important part of a retailer's overall store brand program. But the category's future growth ultimately will be influenced by how well retailers manage to maintain store brand gaps relative to brands, especially as inflationary pressures are expected to impact the shelf.

"While certainly store brands' share, velocity and profit goals factor into retailer pricing strategies," explains ConAgra's Becker, "maintaining the optimal gap vs. leading brands is another key variable worth constant monitoring. When brands promote, retailers should also decide whether price shielding is warranted. Whether to price shield or not varies, certainly by category and often by segment."