Kellogg has cut prices of its single-serve cereal bars in the UK by 29% which could make them competitive amid waistline woes and catapult the brand out of the breakfast aisle, an innovation expert says.
The price reduction translates to 16 pence (26 cents) per bar - originally priced at 55p. The promotion will run from February through July across core brands including Rice Krispies, Nutri-Grain, Biscuit Moments, Coco Pops and Special K. Kellogg has also designed promotional point of sale material for retailers.
The company said in a statement that it hoped the promotion would drive sales and visibility after it reduced its 'core' snack bar range to eight in August.
Steve Osborn, business innovation manager at Leatherhead Food Research, said the price reduction was a bold move and quite aggressive.
“I don’t track businesses to the level of detail like retail pricing, but it would seem that 29% is quite a lot really. It’s going to make them much more competitive. And the fact they’ve gone in with a point of sale too – this is full-on marketing activity,” he told BakeryandSnacks.com.
The timing of the promotion also fits nicely with consumer sentiment, he said, and comes at a time of year that can potentially be damaging to the snacks sector. “People are watching their waistlines in the new year.”
“It’s about them trying to position themselves as a slightly healthier alternative to a chocolate bar for the new year… They’ve got an opportunity because they can be perceived as being slightly better than a chocolate bar.”
A jump into mainstream snacking?
Osborn said the promotion could be part of a broader strategy to bring Kellogg’s cereal bars into mainstream snacking, particularly as the cereal bar segment is so niche and full of strong competition.
“With cereal bars, I don’t think anyone knows where to put them. Do they go next to the breakfast cereals? Kids’ lunchbox foods? Chocolate bars? Maybe Kellogg is trying to move their product out of breakfast cereal into broader snacking,” he said.
“The cost cutting is quite an aggressive move, but if they’re going into mainstream snacking, it’s a bridge they’ve got to build pretty quickly.”
Euromonitor: Kellogg struggling in UK snack bars
Euromonitor International food analyst Deborah Cross said Kellogg doesn’t have a great deal of activity in the fastest-growing sectors of the UK snack bar market, such as energy and nutrition bars and granola/muesli bars.
As a result, she said Kellogg’s overall value share has fallen over the last few years. Kellogg's brands represented a 23% retail value in the UK snacks sector for 2013, down from 24.4% in 2012 and 32.8% in 2008.
“The company lost out heavily as its competitor General Mills leveraged a great deal of sales from its sponsorship of the London 2012 Olympics, promoting healthier snacking, and its activities in launching a comprehensive range of products and flavors in its Nature Valley range. Since London 2012, General Mills has gone from strength to strength.”
Kellogg also faces strong competition from all alternative breakfast products, she said. “This has probably had quite an effect in reducing its share in the breakfast bars category.”
This price promotion is likely a response to “correct the situation and realize sales from their innovations”, she added.
Cross predicted that this limited promotion would particularly benefit the new calorie controlled bars like Biscuit Moments.