All about breakfast
Initially targeted at children, sugary breakfast cereals used animated characters to increase the desirability of the product. However, since the 1960s, the increasing importance of health globally has created obstacles for the breakfast cereals, with the protein, sugar, fat, and fibre content of products becoming an increasingly critical factor to consumers.
In addition, during the 1970s consumers became leading faster paced lives, increasing the demand for easier and more convenient food alternatives.
Globally, the breakfast cereals market was valued at approximately $43-billion in 2016 and is set to grow at a compound annual growth rate (CAGR) of 4.3% to reach an estimated $55-billion by 2022. The US and Europe currently represent the largest markets worldwide but developing regions, such as Latin America, are the fastest growing markets with a CAGR of 7.9% by 2024.
South African breakfast market
How are South African consumers viewing breakfast cereals? Are we also embracing trends in this market in order to ensure continued popularity and growth? Let’s dive a bit deeper and find out.
The table below illustrates the distribution of breakfast cereals according to outlet types for 2012 and 2017.
In 2017, 69.1% of breakfast cereals where distributed via Supermarkets (a decrease from 69.7% in 2012). Interestingly, the distribution of breakfast cereals via mixed retailers increased from 7% in 2012 to 7.3% in 2017.
The South African breakfast cereals market offers consumers a wide range of product options. As a result, the industry is quite competitive, and manufacturers need to be innovative in terms of product differentiation in order to attract consumers to their products.
One way of doing this is by looking at flavours of cereals. Many manufacturers are introducing exotic and unique flavours to their breakfast cereal ranges in order to keep consumers interested.
Woolworths, for example, offers a Baked Crunchy Citrus Granola, a Gluten-Free Raw Goji Berry and Beetroot Granola, and a Cranberry and Coconut Macaroon Muesli. These are simply a few of their unique cereal options. These products also incorporate consumer trends, such as gluten free options.
South Africa’s breakfast cereal consumers are expected to increase by a compound annual growth rate of 1.8% to 18.5 million purchasers in 2020.
There are several trends and drivers that could help further stimulate this market soon: a major trend is the increasing focus of South African consumers on healthy living. Low carb, low sodium, gluten-free or grain-free breakfast cereal options are proving popular among the health-conscious, along with banting-friendly products and porridges that are high in protein and omega 3.
What about one of our breakfast giants, Tiger Brands?
Tiger Brands has prominent market shares in a broad range of categories in South Africa. It has been growing for almost a century through acquisitions and by developing its brands.
“As of 30 September 2017, Tiger Brands’ operating income increased by 11% to R4.6 billion in 2017 (compared to R4.2 billion in September 2016),” according to Tiger Brands integrated annual report 2017.
Further, their grains division indicated a strong increase in revenue and operating income. The former increased by 5%, whereas the operating income for the division increased by 18% to R2.4-billion for the year ended 30 September 2017.
Other grains, which includes Tiger Brands’ breakfast cereals, reported an increase in revenue of 6% to R3.8-billion. Similarly, operating income also increased by 24% to R502-million. These increases were as a result of the strong rand as well as improvements in procurement strategies.
The below graph shows that, for the year ended 30 September 2017, Tiger Brands’ cash generated from operations increased from R4.2-billion in 2016 to R6.1-billion in 2017.
Let’s see what the locals have to say about some of Tiger Brands cereal options: Jungle Muesli Mixed Berries Lite
“Love the taste of mixed berries and what better way in your breakfast bowl. Have not tried this before and would love to. Summer is coming and with this lite muesli you can't pick up weight.” -Christa (South Africa)
“This is a healthy breakfast and easy to prepare for working moms. -Sonitha (Durban)
“We have tried many flavours from Jungle. My daughter cannot live without Muesli. This will be tried for sure! -Jenna (Kloof)
“Love my muesli and yoghurt in the morning. Haven't tried this new flavour from Jungle oats. Would really like to try it out.” -Tracy (Newton Park, Port Elizabeth)
Jungle Oats Instant
“I grew up with Jungle Oats, couldn't wait for mom to finish cooking it. The instant oats are a more convenient and I love the flavours and so do my kids.” -Tanya (Potchefstroom)
“Love the instant oats but do prefer the plain oats for my training program.” -Neil (Cape Town)
“It’s nice, me and my son love it.” -Marina (Pretoria)
“Fresh and Instant with warm flavours, easy peasy too - anyone can prepare breakfast now.”