Manufacturers milk cereal sales with nutritional boosts
Cereal unit sales may be flat, but manufacturers continue to find new ways to appeal to consumers’ nutritional concerns. Fiber, antioxidants and calcium all have been added to ready-to-eat breakfast cereals in response to consumers’ desire for better nutrition without sacrificing good taste.
“A whopping 13 new cereal introductions vaulted into the ranks of the New Product Pacesetters this past year,” said Susan Viamari, editor of Information Resources Inc.’s Times and Trends reports. “Several of these offerings—such as General Mills’ Fiber One Raisin Bran Clusters, Post’s Live Active line and Kellogg’s All Bran Strawberry Medley—are targeted to the health-conscious, at home breakfast diner.”
All of those new products boast better nutritional profiles. “Two of the most pervasive claims in the category are grain claims and all-natural claims,” Viamari said. IRI’s research showed that 54% of cereals on the market contain some sort of grain claim, and 11% are positioned as all-natural.
Fiber, a subset of grain claims, continues to be an important attribute in the category. In fact, according to a recent Mintel survey, about 45% of respondents who eat cereal said that eating a high-fiber cereal is a great way to manage hunger and weight control. Fiber content and sugar content were among the top health attributes deemed important by respondents to the survey.
Manufacturers have responded by adding more fiber and other health attributes to their products. Kellogg’s recently increased the fiber content of some of its most popular children’s cereals, including Froot Loops and Apple Jacks. Walgreens recently featured those cereals on an endcap in stores. Dollar sales for Froot Loops were up nearly 60% in the drug store channel for the 52 weeks ended Dec. 27, 2009, according to IRI. Sales of Apple Jacks were ahead 9% for the same period. “By the end of 2010, we expect that the majority of our ready-to-eat cereals in the United States will qualify as ‘good’ if not ‘excellent’ sources of fiber,” said Susanne Norwitz, a Kellogg’s spokeswoman. “We are actively looking for ways to add more fiber to more products in our global markets.”
The company also is adding fiber to its snack and breakfast bars, a category that continues to grow as consumers eat breakfast on the go. “Kellogg’s FiberPlus Antioxidants bars were launched to help consumers treat themselves to better nutrition in the form of 35% of the daily value of fiber,” Norwitz said. The bars also contain antioxidants, vitamin E and zinc. The company recently added a chocolate peanut butter bar to its FiberPlus Antioxidants bars lineup. Kellogg’s also has added fiber to its line of Pop-Tarts toaster pastries with its Pop-Tarts 20% Fiber products.
Consumers also want more fruit and antioxidants from their cereals. More premium cereals are being introduced, and drug stores are layering more of those products into their mix, realizing that their customers will pay more for products that offer added benefits. “The focus of new, premium cereals is to bridge the gap between health and taste with sophisticated yet functional ingredients,” Mintel’s report said. IRI’s Viamari said: “We’re seeing a lot of cereals adding berries and nuts, since those ingredients provide antioxidants and vitamins.”
Kellogg’s Special K Red Berries cereal was a big success this year, with dollar sales surging ahead 27% at drug stores, according to IRI.
Coca-Cola purchases bottling unit
ATLANTA Coca-Cola announced Friday the expansion of its business through the acquisition of one of its bottlers’ North American business.
The soft drink giant confirmed the $13 billion acquisition of Coca-Cola Enterprises’ entire North American business, which consists of approximately 75% of U.S. bottler-delivered volume and almost 100% of Canadian bottler-delivered volume, Coca-Cola said. In line woth this deal, Coca-Cola agreed to give up its 34% stake in CCE.
In a similar agreement, Coca-Cola and CCE have agreed in principle that CCE will buy Coca-Cola’s bottling operations in Norway and Sweden for $822 million, subject to the signing of definitive agreements, and that CCE will have the right to acquire Coca-Cola’s 83% equity stake in its German bottling operations 18 to 36 months after closing for fair value.
“We have a strong and unrelenting belief in our unique and thriving global bottling system,” Muhtar Kent, Coca-Cola CEO. “Our new North American structure will create an unparalleled combination of businesses, which will serve as our passport to winning in the world’s largest nonalcoholic ready-to-drink profit pool.”
Diamond Foods to acquire Kettle Foods
SAN FRANCISCO Diamond Foods has entered into a definitive agreement to acquire Kettle Foods, makers of premium potato chips, from Lion Capital LLP for $615 million in cash.
Diamond will acquire Kettle operations in both the United States and the United Kingdom.
As part of the agreement, Diamond will purchase all outstanding shares of the snack maker. Kettle Foods would add more than $250 million in revenues and almost double Diamond’s EBITDA, Diamond projected.
The transaction is expected to close by the end of Diamond’s fiscal year 2010, subject to customary conditions, including regulatory approval.
“Kettle Foods’ passion for making great tasting, natural potato chips has attracted a loyal consumer following and shaped a truly premium brand that has our deep respect,” said Michael Mendes, chairman, president and CEO of Diamond Foods. “Diamond and Kettle Foods share a history of relentless focus on flavor and product quality and working collaboratively with our retail partners. By adding Kettle, including its talented team of employees, our snack business will have greater scale, which will help us to drive even greater innovation in the snack market. We expect that the acquisition will be accretive in the first year and is a strong, strategic fit to better support our long-term growth plans.”