Quaker-Oats

Cereal marketers race for global bowl domination

What travels farther: the Quaker oat or Kellogg’s corn flake? As global demand grows for American-style breakfast foods, cereal marketers are battling to make their brands the top choice in China, India, Brazil and elsewhere, where staples like bread and fish have been the traditional morning norm.

The competition is fierce among Kellogg, PepsiCo and Cereal Partners Worldwide, a joint venture between General Mills and Nestle. Together these giants control roughly 52% of the nearly $30 billion worldwide hot- and cold-cereal market, according to Euromonitor International.

Opportunities are arising as consumers across the globe are acting more like Americans, the research company said in a recent report: “Breakfast was traditionally a sit-down meal in most markets, but is now often eaten hurriedly or on the go in the form of snack bars or ready-to-eat breakfast cereals.”

But even as cereal makers leverage their vast global marketing budgets to spur growth, they are finding that breakfast is still influenced by local customs. Indeed, the toughest competition might be from breakfast foods that have been in place for centuries, like a watery rice gruel called congee in China. “Breakfast around the world is probably the meal that is most rooted in tradition,” said Gannon Jones, chief marketing officer for PepsiCo’s Global Nutrition Group.

And even when foreign consumers eat cereal, they often eat it differently than Americans do.

In Spain, for instance, Kellogg has found that people like to dump All-Bran cereal into their coffee, so the marketer is now advertising it that way. In France, the company has formulated its Kellogg’s Extra brand to go with yogurt, while it shows the brand with hot milk across Europe, where cold milk is a less popular pairing. In India, Corn Flakes with saffron is planned.

The strategy looks “at how we can adapt our foods to the local habit, as opposed to trying to change the local breakfast habit,” Kellogg CEO John Bryant told Wall Street analysts earlier this year. Leo Burnett handles brand support in North America, Europe and Latin America, while JWT has Asia Pacific.

To be sure, the cereal business remains rooted in the US, Canada, UK and Australia, which together account for 54% of global consumption despite having just 6% of the population, according to Switzerland-based Cereal Partners Worldwide, which operates in more than 130 countries. But in the US — where yogurt is taking hold as a breakfast option — cereal will grow by just 3.6% from 2011-2016, compared with 38% in China and 108% in India, according to a Euromonitor forecast.

Although Quaker has only an 8.9% cereal share globally according to Euromonitor, it dominates hot cereals, which could give it an edge in some markets. In China, for instance, hot cereal holds 54% of the cereal market, compared with 11% in the US. In other key markets cold cereal holds the advantage, such as in Brazil, where it accounts for 74% of the cereal market…..

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