1. KELLOGG’S CASE
In an ironic move, Kellogg - the $13-billion cereal maker - has stepped into the
hot breakfast segment with its Heart To Heart Oats.
In an ironic move, Kellogg - the $13-billion cereal maker - has stepped into the hot breakfast
segment with its Heart To Heart Oats. With a portfolio of cornflakes and its many variants,
Kellogg has been known the world over for its cold breakfasts - a recipe for disaster in India.
Indians, with their proclivity for piping hot breakfast, found that cornflakes turn soggy the
moment warm milk was added. Kellogg had entered India in 1994 with the promise of
changing the breakfast habits of Indians.
Food habits have taken a healthy turn since then, although not at the pace Kellogg would
have liked, and the acceptance of cereals, cornflakes, oats and muesli has improved. Kellogg
has tried every trick in the bag with smaller and more affordable packs, variants for evening
meals and niche products such as Special K cornflakes for women. Of the Rs 400-crore
cornflakes market (growing at 20 per cent per annum), it now commands around 70 per cent.
With oats, Kellogg would enter the other breakfast segment which is Rs 100-120 crore in size
and is growing at a fast-clip of 30 per cent a year. Culturally, it might give Kellogg access to
more breakfast tables because oats is preferred with warm milk - just what Indians like.
Kellogg claims it has tailored the product to suit the Indian palate, and it takes under three
minutes to cook. Instant oats preferred with warm milk has its affinity with traditional Indian
porridge made from dalia, sooji, sattu or sabudana for breakfast. Kellogg has kept the pricing
in line with the market - 200 grams for Rs 29, 400 grams for Rs 55 and 1 kg for Rs 118.
As analysts point out, it is easy to penetrate the breakfast market for packaged foods
companies, since Indians have set habits and tastes for other meals like lunch and dinner. As
a result, instant oats is seeing a flurry of new players. While India-based Bagrry's was the
first to hit the market, PepsiCo brought in its marketing muscle with Quaker Oats. Marico has
been test-marketing its product under the Saffola brand in the south which is a strong market
for oats.
After initial hiccups in the cornflakes segment, Kellogg has been successful in capturing kids'
and their mothers' attention with its variants such as CHOCOS and Honey Loops. With oats,
as in its Special K cornflakes, the accent is more on health for adults. Kellogg India
Managing Director Anupam Dutta said at the launch, "We understand the concerns of today's
middle-aged Indians, and that's why we decided to launch the product. A Kellogg's Heart To
Heart Oats breakfast easily fits into one's daily routine without much effort, time or money. It
has been created to be a good choice for people who care for their heart because of age,
genetics or family history, and will, hopefully, be a step to a healthy lifestyle." Oats reduce
cholesterol and keep blood pressure in check with a low salt content.
However, Kellogg's positioning remains generic since oats are perceived as intrinsically good
for the heart, and another brand (Saffola) already has mindshare as food for a healthy heart.
Even as Kellogg rolls out its product, it has to be seen if it can pip the early birds and create a
differentiation in oats for breakfast.