Breakfast cereal market US & Canada Essay Example for Free

Breakfast cereal market US Canada Essay The US breakfast cereal market declined by 12. 5 % between 1995 and 2000 due to the changing lifestyles. The customers were in a hurry and started to go in for handheld breakfast options such as muffins, bagels or doughnuts. The figure below shows the state-wise distribution of the supply and demand for the breakfast cereal industry in United States. Fig – 10 Supply and demand of Breakfast cereal in US by state (Dept. Of Homeland Security, 2007, p. 16) US, as was seen earlier, is a major exporter of breakfast cereals. The figure below shows the top export markets for US origin break fast cereal. As can be seen from the figure Canada and Mexico are the biggest destination for these exports. Fig – 11 Top Export Markets for US origin Breakfast cereals (USDA, 2005, p. 12) Breakfast cereal market Europe As in US, cereals were not a part of usual breakfast menu in Europe. However, breakfast cereals have seen a growth in Europe in recent times. This is probably because cereals are increasingly being accepted in Europe as a health and convenience food. Following are the trends of five key markets in Europe: ? Germany – In Germany there was a trend of families eating together at the breakfast table. This trend is increasingly changing which is seen as an opportunity for the growth of small-pack or single-portion of foods. Breakfast cereal manufacturers’ trends towards product diversification would be extremely helpful in increasing this share. ? France – In France, breakfast is not traditionally a large meal. This trend is changing with the launch of particular breakfast cereal products such as those containing chocolate flakes or chunks which has led to an increase in the sales volume of breakfast cereals in the country. ? Spain – Spain is becoming increasingly health conscious because of the declining birth rate and ageing population. This has prompted the need for healthy eating which ahs automatically led to an increase in the sales of breakfast cereals in the country. ? UK – In UK too the trend is moving away from traditional breakfast which means that the sales of breakfast cereal ought to diminish. However the increased number of single person households and the number of people aged above 55 means that the need for convenience as well as health food is still there though the customer segment has changed. ? Italy – The breakfast cereal market in Italy has been always very dynamics with ready-to-eat cereals accounting for almost 98% of the market value. The target customer segment has been mostly women who are both health conscious as well as fast to eat. This means that the breakfast cereal market is not expected to reduce in near future. (Mintel, 2004) PART II INDIVIDUAL COMPANY REPORT: KELLOGG’S Introduction Kellogg’s brand is one of the most unique brands in the world. This is because it is one of the most famous breakfast cereal brands and along with being a market leader the brand as been around for as long as anyone can remember – to be precise since 1906. Kellogg’s was in fact responsible for bringing about a breakfast revolution in America from the initial heavy hot foods such as port of beef accompanied by starch items to cereals made from various grains. Kellogg’s Corn Flakes with Will Kellogg’s familiar red signature on the box have become a staple of the American households since the 20th century. The paper presents the market analysis of this pioneering company. History Kellogg Company was formed when production of Kellogg’s Corn Flakes ® about a century ago. The company was started by John Harvey Kellogg, with only 44 employees in Battle Creek, Michigan in 1906. He named the company as Battle Creek Toasted Corn Flake Company and named his younger brother Will K Kellogg as the president of the new company. The cartons of the company carried the bold and famous legend â€Å"None genuine Without the Signature – W. K. Kellogg† in simulated script. This Will Kellogg’s independent business career began at the age of 46. John Kellogg was unwilling to advertise the company’s products and wanted them to be used only for his patients (he was the head physician and supervisor at the Battle Creek Sanitarium which was a very well known health spa found by the Seventh-day Adventists). Will however wanted to market their products more widely with the result that one of the patients who tasted the flakes set out to reproduce them; the company which would later become the General Foods Corporation. The brothers clashed on this issue and Will Kellogg gained absolute control of the company. The company began production at the rate of 33 cases a day. Will aggressively promoted his company and product, with its first full-page ad in the Ladies’ Home Journal. In its first year the company shipped 175,000 cases of cornflakes, a number with reached more than one million by 1909. Within five years Kellogg’s Corn Flakes had found their way into the majority of kitchens across America with an advertising budget of one million dollars. Will Kellogg was know to use ingenious advertising campaigns which reflected a type of inspired commercial evangelism, perhaps rooted in his Seventh Day Adventists background (Ingham, 1983, p. 698-699). The worldwide expansion of the company began in 1914, and by 1938, it had plants in England and Australia. When WK Kellogg died in 1951, the company tried and succeeded in introducing several new products, the most famous of which was the introduction of Pop Tarts in 1964. Till 1979 the company saw increase in its market share, which declined in the period between 1979 and 1983 from 42 percent to 38 percent. The market itself had become mature showing only a 25 growth rate which was 7 percent a decade earlier. The company then started to diversify in to products such as nutria-bars and Rice Krispies, and by 1985 had regained its market share of 42 %. The 1990s saw a change in lifestyle where customers started turning away from breakfast cereals and went in for hand snacks such as bagel, muffins or doughnuts. General Mills started closing in the market share gap with Kellogg’s with successful product launches and in 1998 overtook declining Kellogg for the first time. , with a market share of 32% as against the 32% market share of Kellogg. However, Kellogg was still the world market leader with a net market share of 40% (Thomson Martin, 2005: 149-150) By the year 2001, Kellogg diversified into cookies with the acquisition of Keebler. Today, Kellogg Company employs more than 26,000 people. The products are manufactured in about 19 countries and sold in 180 countries across the world (Kellogg). Organization Kellogg has a huge network of global manufacturing and marketing units. The company manages this by dividing its operations into two segments United States and International. The International segment is further divided into Europe, Latin America, Canada, Australia, and Asia The company food choices include more than 1500 products that are manufactured in 59 facilities across the world (Kellogg).