Consumption of breakfast cereals has increased steadily since the Second World War, and has shown strong volume growth over the past 32 years. This is remarkable given that the market is so mature and given that cereals have faced increasingly fierce pressure from alternatives such as cereal bars and croissants. Furthermore, consumption in some areas appears to have accelerated during the current decade (the 2000s). The healthy image and the convenience of breakfast cereals are the main factors driving the market forward. The breakfast cereals market grew by 15.7% in value terms between 2004 and 2008, with particularly strong growth being seen in 2007. The major companies in the ready-to-eat (RTE) cereals sector undertook a great deal of activity in 2006 and 2007, which may also have helped to stimulate sales. However, the perceived health benefits of breakfast cereals is the main factor driving sales. RTE cereals dominate the UK breakfast cereals market, accounting for 91.2% of sales by value in 2008, compared with 92% in 2004. This slight decrease in market share reflects the faster growth of hot cereals (porridge and oats) during the 5-year review period. The muesli segment of the RTE sector also experienced strong growth between 2004 and 2008. This sector benefits from its healthy image, and suppliers have stimulated value growth over recent years by launching premium products. The hot cereals sector has shown very strong growth over the analysis period, with the exception of 2007 when a warm winter dampened sales growth. Consumption of hot cereals had been in long-term decline, but has risen over the past 5 years due to growing awareness of the health benefits of eating oats. Three companies ' Kellogg, Weetabix and Cereal Partners (an alliance between Nestl

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Breakfast Cereals
Published on January 2009
Report Summary
Consumption of breakfast cereals has increased steadily since the Second World War, and has shown strong volume growth over the
past 32 years. This is remarkable given that the market is so mature and given that cereals have faced increasingly fierce pressure
from alternatives such as cereal bars and croissants. Furthermore, consumption in some areas appears to have accelerated during
the current decade (the 2000s). The healthy image and the convenience of breakfast cereals are the main factors driving the market
forward.
The breakfast cereals market grew by 15.7% in value terms between 2004 and 2008, with particularly strong growth being seen in
2007. The major companies in the ready-to-eat (RTE) cereals sector undertook a great deal of activity in 2006 and 2007, which may
also have helped to stimulate sales. However, the perceived health benefits of breakfast cereals is the main factor driving sales.
RTE cereals dominate the UK breakfast cereals market, accounting for 91.2% of sales by value in 2008, compared with 92% in 2004.
This slight decrease in market share reflects the faster growth of hot cereals (porridge and oats) during the 5-year review period. The
muesli segment of the RTE sector also experienced strong growth between 2004 and 2008. This sector benefits from its healthy
image, and suppliers have stimulated value growth over recent years by launching premium products. The hot cereals sector has
shown very strong growth over the analysis period, with the exception of 2007 when a warm winter dampened sales growth.
Consumption of hot cereals had been in long-term decline, but has risen over the past 5 years due to growing awareness of the
health benefits of eating oats.
Three companies ' Kellogg, Weetabix and Cereal Partners (an alliance between Nestlé and General Mills) ' have dominated the UK
breakfast cereals market for many years, as these companies are able to devote huge resources to marketing, building brands and
developing new products. Smaller companies have had considerable success in targeting niche markets, and, in some cases, have
pioneered new areas of the industry, such as cereal bars.
The breakfast cereals market should continue to prosper in the long term, given its healthy image and the convenience of most
products. Health and convenience have been the two major trends influencing food and drinks markets over the past 3 decades (i.e.
since the late 1970s), and Key Note expects that this will remain the case for at least the next 10 years to 2019. Breakfast cereal
makers have also responded to criticism of their products by lowering sugar and salt content and reinforcing the positive image of the
market with fortified and premium products. However, for the second consecutive year, Key Note expects the market growth to slow in
value terms in 2009, as the economic recession currently affecting the UK (as at January 2009) continues. Consumers are likely to
switch away from premium and organic products in favour of cheaper alternatives.
Table of Content
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Executive Summary
1. Market Definition
REPORT COVERAGE
MARKET SECTORS
Ready-to-Eat Cereals
Hot Cereals
MARKET TRENDS
Healthy Eating
Eating Habits
Snacking
Price of Ingredients
ECONOMIC TRENDS
Gross Domestic Product
Table 1: UK Gross Domestic Product at Current and Annual
Chain-Linked Prices (£m), 2003-2007
Household Disposable Income
Table 2: UK Household Disposable Income Per Capita (£), 2003-2007
Inflation
Table 3: UK Rate of Inflation (%), 2003-2007
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Unemployment
Table 4: Actual Number of Unemployed Persons in the UK (million), 2003-2007
Population
Table 5: UK Resident Population Estimates by Sex (000), Mid-Years 2003-2007
MARKET POSITION
The UK
Table 6: Consumer Expenditure on Breakfast Cereals as a Percentage of Total Expenditure on Food and Non-Alcoholic Drinks at
Current Prices (£m at rsp and %), 2004-2004
Overseas
2. Market Size
THE TOTAL MARKET
By Volume
Table 7: Consumption of Breakfast Cereals and Oatmeal and Oatmeal Products in the UK (grams per person per week), 1974, 1995,
2002/2003 and 2004/2005-2005/2006
Figure 1: Consumption of Breakfast Cereals and Oatmeal and Oatmeal Products in the UK (grams per person per week), 1974, 1995,
2002/2003 and 2004/2005-2005/2006
By Value
Table 8: The Total UK Breakfast Cereals Market by Sector by Value at Current Prices (£m at rsp), 2004-2008
Figure 2: The Total UK Breakfast Cereals Market by Sector by Value at Current Prices (£m at rsp), 2004-2008
BY MARKET SECTOR
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Ready-to-Eat Cereals
Table 9: The UK Ready-to-Eat Cereals Sector by Value at Current Prices (£m at rsp and %), 2004-
Table 10: The UK Ready-to-Eat Cereals Sector by Value at Current Prices (£m at rsp and %), 2008
Figure 3: The UK Ready-to-Eat Cereals Sector by Value at Current Prices (%), 2008
Hot Cereals
Table 11: The UK Hot Cereals Market by Value at Current Prices (£m at rsp and %), 2004-2008
OVERSEAS TRADE
3. Industry Background
RECENT HISTORY
NUMBER OF COMPANIES
Table 12: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in the Manufacture of Breakfast Cereals and Cereal-Based
Foods by Turnover Sizeband (£000, number and %), Year Ending September
EMPLOYMENT
Table 13: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in the Manufacture of Breakfast Cereals and Cereal-Based
Foods by Employment Sizeband (number and %), Year Ending September
REGIONAL VARIATIONS IN THE MARKETPLACE
DISTRIBUTION
Table 14: The UK Breakfast Cereals Market by Distribution Channel by Value (%), 2008
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HOW ROBUST IS THE MARKET'
LEGISLATION
KEY TRADE ASSOCIATIONS
Association of Cereal Food Manufacturers
The Food and Drink Federation
4. Competitor Analysis
THE MARKETPLACE
Rankings by Turnover
Table 15: The Leading UK Breakfast Cereals Manufacturers by Turnover (£000), Latest Financial Results
MARKET LEADERS
Cereal Partners UK
Dailycer Ltd
Dorset Cereals Ltd
Doves Farm Foods Ltd
W Jordan (Cereals) Ltd
Kellogg Company of Great Britain Ltd
Morning Foods Ltd
Quaker Oats Ltd
Weetabix Ltd
Whole Earth Foods Ltd
Other Companies
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OUTSIDE SUPPLIERS
Food Flavourings and Ingredients
Specialist Machinery
Packaging
MARKETING ACTIVITY
Main Media Advertising Expenditure
Table 16: Main Media Advertising Expenditure on Breakfast Cereals (£000), Years Ending September 2007 and 2008
Table 17: Main Media Advertising Expenditure on Ready-to-Eat Breakfast Cereals (£000), Year Ending September
Table 18: Main Media Advertising Expenditure on Cereals Requiring Preparation (£000), Year Ending September
5. Strengths, Weaknesses, Opportunities and Threats
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
6. Buying Behaviour
CONSUMER PENETRATION
Ready-to-Eat Cereals
Household Penetration
Table 19: Consumption of Ready-to-Eat Breakfast Cereals in the Past 12 Months (% of adults), Year Ending March
Frequency of Purchase
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Table 20: Consumption of Ready-to-Eat Breakfast Cereals in the Past 12 Months by Frequency (% of adults), Year Ending March
The Effect of Children in the Household
Table 21: Consumption of Ready-to-Eat Breakfast Cereals in the Past 12 Months by Age of Children in Household by Frequency (%
of adults), Year Ending March
Hot Cereals
Household Penetration
Table 22: Consumption of Hot Breakfast Cerealsin the Past 12 Months (% of adults), Year Ending March
Frequency of Purchase
Table 23: Consumption of Hot Breakfast Cerealsin the Past 12 Months by Frequency (% of adults), Year Ending March 2008
The Effect of Children in the Household
Table 24: Consumption of Hot Breakfast Cerealsin the Past 12 Months by Age of Children in Household by Frequency (% of adults),
Year Ending March 2008
7. Current Issues
New Product Development ' Manufacturers Focus on Health Issues
Health Issues
Concerns Over Salt Content of 'Healthy' Breakfasts
The Economy
UK Facing Serious Economic Downturn
8. The Global Market
THE TOTAL MARKET
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Table 25: The Estimated World Market for Breakfast Cereals by Volume and Value (000 tonnes and $bn), 2004-
The US
The Developing World
9. Forecasts
INTRODUCTION
The Economy
Gross Domestic Product
Table 26: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2008-2012
Population
Table 27: Forecast UK Resident Population by Sex (000), Mid-Years 2008-2012
Inflation
Table 28: Forecast UK Rate of Inflation (%), 2008-2012
Unemployment
Table 29: Forecast Actual Number of Unemployed Persons in the UK (million), 2008-2012
FORECASTS 2009 TO
Table 30: The Forecast Total UK Breakfast Cereals Market by Sector by Value (£m at rsp), 2009-2013
MARKET GROWTH
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Figure 4: The Forecast Total UK Breakfast Cereals Market by Sector by Value (£m at rsp), 2004-2013
FUTURE TRENDS
New Product Development
Competitor Forecasts
10. Company Profiles
DAILYCER LTD
DORSET CEREALS LTD
DOVES FARM FOODS LTD
W JORDAN (CEREALS) LTD
KELLOGG COMPANY OF GREAT BRITAIN LTD
MORNING FOODS LTD
QUAKER OATS LTD
WEETABIX LTD
11. Further Sources
Associations
Publications
General Sources
Government Publications
Other Sources
Bisnode Sources
Understanding TGI Data
Number, Profile, Penetration
Social Grade
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Standard Region
Key Note Research
The Key Note Range of Reports
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