Research Spotlight: The Cereal and Snack Bar Market
After impressive growth through 2007, sales have remained flat and the category is losing customers to other better-for-you snacks.
by Denise Purcell
Cereal and snack bars are facing challenges in the market, reports Mintel International. Though sales rose about 50 percent over the past five years to $1.7 billion, the declining economy stopped the category’s momentum in 2008-2009. Sales volumes have been flat since 2007, and small growth in dollar sales is due to price increases. The bars (defined as breakfast/cereal/snack bars; granola bars; and all other snack/granola bars by Mintel) are in competition with many other convenient, better-for-you snacks that have shown solid sales performance, including cheese, yogurt and trail mix.
Product launches have declined more than 40 percent since peaking in 2007, but new rollouts are emphasizing functional health benefits, all-natural and organic ingredients, taste, flavor and form variety. Added fiber is especially a popular attribute.
• Cereal, granola and snack bars experienced their strongest growth in 2006-2007 as a variety of product introductions reinvigorated the category and generated new trial. Sales have stalled since 2008.
• Themes such as health and wellness; natural ingredients; and new taste experiences continue to move market share, but since the recession they appear to lack the power to grow the category as a whole.
• The granola bar segment outsells cereal bars by a small margin and accounts for a little more than half of total sales. Granola bars’ perception as an all-family snack may open them up to more consumption opportunities.
• The cereal bar segment has become more narrowly focused on health and weight management over the past five years, driven by Fiber One and Special K brands. In the meantime, sales of kid-focused cereal bars, a significant sub-segment in 2005, have declined steadily over time.
• The biggest drop in product usage in 2009 occurred in diet bars, with only 13 percent of bar users claiming to eat them, down from 22 percent a year earlier.
• A number of snack bars defy classification as either cereal bars or granola bars and are grouped under the heading of Other. They represent diverse specialized products and emerging trends that are starting to make an impact on the category in various mainstream retail channels.
FDM (Food, Drug, Mass Merchant) Sales of Cereal Bars and Granola Bars by Type, 2008 and 2009
*52 weeks ending Dec. 27, 2009; Data may not equal totals due to rounding; Does not include U.S. natural supermarket sales
SOURCE: MINTEL/BASED ON INFORMATION RESOURCES, INC. INFOSCAN® REVIEWS™
Cereal bar segment sales have increased 4.4 percent since 2008 to $743 million, and 34 percent since 2004 as the category’s composition has evolved. The segment is today more health-focused with fiber and weight management brands accounting for 47 percent of segment sales. Cereal bars are also focusing on natural ingredients and indulgent flavors. After a few years of growth driven by new product introductions that peaked in 2007, granola bar segment sales have flattened out, increasing only 2.1 percent from 2008 to 2009. Other bars showed a small increase of 3.4 percent.
Selected Manufacturer and Brand Sales of Other Snack Bars, 2008 and 2009
*Rolling 52 weeks ending December 28, 2008; **Rolling 52 weeks ending December 27, 2009
Data may not equal totals due to rounding
SOURCE: MINTEL’S ESTIMATES BASED ON INFORMATION RESOURCES, INC. INFOSCAN® REVIEWS™
Products that aren’t classified as either cereal or granola bars but represent distinct benefits and emerging trends comprise the Other segment. The small size of this alternative segment is a reminder of the challenges facing small brands and companies in a category where a handful of major competitors dominate the mainstream retail shelves. Lärabar, the company showing the most marked sales increase, was acquired by General Mills in 2008, enabling it to substantially grow sales by expanding distribution into mainstream supermarket channels.
• Use of one or more types of bars—cereal, granola, energy and diet—was reported by 62 percent of adults interviewed, a decline from Mintel research conducted in September 2007 and August/September 2008, which showed usage holding steady at around 70 percent.
• Cereal and snack bar usage has slipped farther among female consumers than it has among males over the past two years.
• Younger respondents in their 20s, 30s and 40s are more likely to be on the go and are far more likely to report eating bars.
• Flavor is the number-one influencer of brand selection for all types of bars. Cost is nearly as important a decision factor as taste.
• Fiber content is a factor influencing selection for a little more than a third of users, but these fiber-seeking consumers have had a significant impact on the category in the past few years. The same is true for natural/organic ingredients.
• The presence of whole grains is an important consideration in selection, more so for cereal/breakfast and granola bars than for energy/protein and diet bars.
• At least four in ten users each of granola bars, cereal/breakfast bars, energy/protein bars and diet bars see their bars as a snack between meals. For meal replacers, breakfast and lunch are the meals most likely to be replaced by bars. Cereal/breakfast bars and granola bars skew to breakfast, while energy/protein bars and diet bars are strongest at lunchtime.
Incidence of Adult Consumption of Cereal/Granola/Energy Bars by Gender, Age, 2007-2009
Consumption of bars has dropped over the past two years, particularly among women. This may be because women are migrating to other healthful snacks such as yogurt. As primary shoppers, women may also be more attuned to the need to rein in non-essential food expenses.
Factors Influencing Cereal/Breakfast Bar Purchase by Gender, December 2009
Flavor, cost and variety are among factors that influence female consumers’ purchases while males look for vitamin and mineral content. Ingredients and attributes such as whole grain, fiber, natural/organic and antioxidants appeal pretty much equally to both genders. Further research shows that older users look for whole grains, fiber content and low sodium.
• New cereal and snack bar product launches in 2009 declined more than 40 percent since peaking in 2007, from 550 to 325, according to Mintel’s GNPD (Global New Products Database). Some successful mass-market launches such as Kellogg’s Fiber Plus appear to have been more effective at stealing market share than at boosting overall segment or category sales.
• Despite the decline in numbers, new cereal and snack bar launches continue to reshape the category. The emphasis remains on three areas: functional health benefits; all-natural and organic ingredients; and taste, flavor and form variety.
• Fiber was the focus of new rollouts in 2009.
RECENT NEW PRODUCT INTRODUCTIONS
• BORA BORA Organic All-Natural Superfood Tiki Blueberry Bars have no refined sugar or GMOs.
• CASCADIAN FARM Organic Flax RIGHT Wholegrain Crunchy Granola Bars are kosher- and USDA organic-certified.
• EVERYTHING RAW Organic Yoga Bar with white chocolate flavor is made from 100 percent raw food.
• FULLBAR 100% Natural Cranberry Almond Bars claim to help the user to feel full, reducing cravings.
• GENUINE HEALTH Greens+ Hip to be Healthy Squares include almond butter and brown rice crisps.
• HONEST FOODS Almond Trail Mix Bar is a vegan product made with organic oats and almond butter.
• POMX BAR Peanut Butter Dipped in Chocolate Antioxidant Super Bar is gluten-free and kosher.
• POP CULTURE PROBIOTICS 90 Calories Yogurt Fruit & Nut Bar contains GanedenBC30 probiotic.
• RESVERATROL WINETIME BAR contains resveratrol, an antioxidant found in grapes plus seven superfruits.
• TRADER JOE’S PB & J Bar is a gluten-free peanut butter and raspberry jam bar sandwiched between milk and dark chocolate, and sprinkled with crushed potato chips.
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