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Consultant: ‘Traditional cereal companies fooled themselves for years’

By Kacey Culliney+

20-Dec-2013

How much longer will this utensil be a part of the morning ritual? Not long, suggests healthy foods consultant and cereal makers need to play catch up with snackification...
How much longer will this utensil be a part of the morning ritual? Not long, suggests healthy foods consultant and cereal makers need to play catch up with snackification...

People don’t eat cereal from a bowl every morning – they go to Starbucks, drink smoothies and eat breakfast biscuits. Cereal makers need to play catch up, says a healthy foods consultant.

New Nutrition Business has published its annual 12 key trends in food, nutrition and health that include weight wellness, permission to indulge, slow energy and the snackification of everything, among others.

Healthy foods consultant and director of New Nutrition Business Julian Mellentin said that the latter has gained most traction in the breakfast area.

“The snackification of everything is going to go running on through next year, and probably into the end of our working careers… Breakfast at the moment is the segment where it’s happening furthest,” Mellentin told BakeryandSnacks.com.

“Traditional cereal companies fooled themselves for years. They decided to believe that people were happy every day to have cereal with milk poured on it. But people are eating toast, bagels, fruit and other on-the-go options,” he said.

In the US alone, cereal consumption has dropped by around 1% each year for the last decade, according to Rabobank data.

‘Belvita recognized what was happening’ 

"The biggest killer of innovation is senior management because they’re highly risk averse"

Mondelez was the first major company to recognize this shift in breakfast consumption habits, Mellentin said, with the launch of its Belvita breakfast biscuits that have since done tremendously well.

“Only now, with the trend established for about 15 years, and after Belvita, are cereal companies rushing to catch up,” he said.

Traditional cereal sales will continue to decline because consumer preferences have moved on, he said; therefore cereal companies need to re-design their business.

“Certainly if you’re a traditional cereal manufacturer, you have to accept there’s a huge segmentation of the market. Breakfast is not just cereal; it’s Starbucks, smoothies, fruit. Manufacturers should find all the segments to compete in – it requires a diversification of your product portfolio. Portfolios will have to become highly fragmented,” he said.

Overcoming the fear of ‘risk’ 

Cereal companies are playing catch up on the snackification trend because of a fear of change, Mellentin said.

“Senior management are often locked into a paradigm of business that made sense when they started, and it takes a lot of courage to change.”

However, companies succeeding – with the sales figures to back it – are those innovating and changing in the marketplace, he said.

“It’s riskier to stay with something old than trying something new. The fear of risk is actually riskier than going ahead and doing it… You have to look at the markets as they are, not as you’d like them to be.”

Changes must be taken before competitors or other businesses from different categories.

“Existing management will always lose to outsiders unless they change their thinking… The biggest killer of innovation is senior management because they’re highly risk averse,” Mellentin said.

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