Kelloggs - Insights into the UK Cereals Market

The AQA GCSE Business Studies (3132) pre-release case study is on Kelloggs and the UK cereals market. In this blog post, we take a look at some recent data that helps analyse the market.

The UK cereals market is mature and highly competitive, with dozens of brands and product formats each competing for the household grocery spend.

The breakfast cereal market is growing by 5.7% year-on-year (excluding toaster pastries and bars), driven through the performance of ready-to-eat (RTE) cereals (92% of the market). Only 3% of the UK population did not purchase any cereal in the latest year, which means that the growth of the market has been as a result of buyers shopping more often and spending more each time they go.

RTE cereals, as the main sector consisting of all the stock-cupboard favourites, is also growing through buyers purchasing more often and spending more each time they purchase. Weetabix and Kellogg’s dominate the top five brands, while Nestle Shreddies has slipped four places.

There has been a lot of activity within the RTE market in the past 18 months, with oat RTE cereals becoming far more prominent and launches by all the major manufacturers, such as Weetabix Oatibix, Kellogg’s Optivita and Nestle Oats & More.

Cereal bars as the second-biggest sector is growing through households spending an additional £1.33 a year on the sector. It also gained 123,000 new shoppers. More than half the population purchased a cereal bar every six weeks.

Instant porridge has gained an additional 615,000 household buyers in the latest year. These buyers are slightly lighter buyers, as the average frequency of purchase and spend per trip has decreased year-on-year. Although it has lost share to RTE cereal, it is still gaining shore from its traditional porridge counterpart. Oatso Simple, the leading brand within the instant porridge sector, has gained two places in the top 10 brands, moving up from eighth to sixth.

Porridge oats has been a relatively static performer year-on-year. Though the number of shoppers is down and they are purchasing less often, they are increasing the amount they spend per shopping trip.

Data: (Source TNS Panel, year to August 2007)

Total cereals
VALUE (£k) SHARE % CHG

TOTAL CEREALS 1,659,954 100.0 6.1
Ready-to-eat cereals 1,255,674 75.6 6.0
Cereal bars 280,316 16.9 8.7
Instant porridge 65,896 4 3.3
Porridge oats 47,094 2.8 0.7
Toaster pastries 11,015 0.7 0.3