Industry should stand poised for breakfast cereal boom in India: Analyst

The Indian breakfast cereal market was pegged at $139m for 2012, with market growth doubling over the last six years, according to new Mintel research.

Peter Ayton, global consumer analyst at Mintel, described the market as interesting as it epitomizes opportunities presented by the shift away from non-packaged, low-value goods.

“Cereals epitomize the growth potential there is in India with the shift to packaged goods. Packaged breakfast cereals is a really interesting sector in India because it’s not only replacing non-packaged items but also cooked, traditional breakfasts,”​ Ayton told BakeryandSnacks.com.

“It’s creating a national market in place of a traditional food type that is very regional,”​ he said.

“It is still a small market in the scheme of things but it is growing fast and the background to this is affluence. There’s growing affluence and greater urbanization but another factor is that the in-home market is pretty good in the country.”​

Ayton noted that overall consumer expenditure in India is set to increase by 13% each year for the next three years.

Convenience, sophistication and health​

The market is currently brand-led and comprised of ready-to-eat (RTE) adult cold cereals that represent 40% of the market, RTE children’s cold cereals (20%) and hot cereals (40%).

“I think convenience, sophistication and health benefits will drive the market,”​ Ayton said.

“Products with some type of function or health benefit are set to sell well, particularly in the children’s category,”​ he added.

The global analyst said that international retail entry into the country - a move set to happen soon - would drive sales further.

Investments galore​

Earlier this year, India media reports suggested that two of the country’s biggest food companies – Hindustan Unilever (HU) and Nestlé – were preparing to extend into the oats​ category with new products.

In 2011, PepsiCo pledged to double its Quaker business every two years in India. Nestlé and Kellogg have also been investing in the market with research and development (R&D) centers and packaging and flavor innovation.