Breakfast cereals market is expected to exceed USD 43.0 billion by 2022.The market is expected to exhibit a growth rate exceeding 4% CAGR from 2015 to 2022. Increasing consumer awareness towards healthy eating habits is anticipated to drive demand over the forecast period.
Increasing trend to adopt western dietary patterns in emerging economies such as Indonesia, India and Malaysia is driving the growth in breakfast cereals market. Several urban consumers are getting accustomed to eating cereals with milk for breakfast which is easy to prepare and also offers many health benefits. Increasing consumer disposable income in emerging economies of Asia Pacific and Latin America has led to high demand for breakfast cereals.
Busy lifestyle and hectic pace of modern life with no time to prepare food are anticipated to play a major role in market growth. High rate of women empowerment in tedious tasks and longer working hours has led to increased product demand. Various companies manufacture instant breakfast cereals which just require hot water to be added and can consumed at home or workplace. These products are gaining significant share in daily consumption among students and busy service class on account of time and cost saving.
Increasing consumer awareness towards benefits associated with these breakfast cereals along with growing desire for low calorie and high carbohydrate/fiber content products for weight loss is expected to drastically impact product sales. These products are also gaining significant prominence in infant food industry owing to enhanced nutritional value and ease of preparation. Increasing demand for more value-added cereals containing whole wheat, high fiber content and other healthy ingredients is expected to steer healthy breakfast cereals market growth.
High raw material procurement cost along with decentralized supply scenario is expected to remain a key challenge for the industry participants. Increasing commodity and energy prices adversely effects the production of the cereals. For example, procurement cost of palm oil, a major ingredient in making cereals is very high, making it difficult to produce commercial quantities of finished products.
Abundant availability of numerous alternatives for breakfast cereals including eggs, fruits, cereal bar, toasts and yoghurt is expected to remain a key factor hindering industry expansion. These alternatives are cheaper than the breakfast cereals. Other traditional breakfasts and fast food also effect the sales of cereals. Yoghurt an alternative to the breakfast cereals is growing rapidly in the industry having 40% demand of the U.S. ready-to-eat market.
Availability of large number of local food stalls and ready-to-eat breakfast outlets, which serve large amount of local breakfast delicacies at cheaper rates in major economies is also expected to negatively impact growth in near future. This is further hindered by low consumer awareness towards health benefits and less consumer conversions from conventional foodstuff to breakfast cereals.
High percentage of sugar, salt or saturated fats in the products leads to a decline in the consumer market. Moreover high-bran products often lead to discomforts. Uncontrolled cereal consumption can also lead to increase in chances of arthritis.
Emphasis on healthy lifestyle has encouraged many key players in the market to introduce new products that suit all age groups and lifestyles. Various industry participants are trying to replace harmful hydrogenated fats and oils with healthier ingredients such as fruits and fiber. High demand for gluten free and whole wheat cereals particularly in mature economies of the U.S., UK, France and Japan is expected to increase industry penetration.
Breakfast cereals are broadly classified by type into ready-to-eat (RTE) and hot cereals. The growth rate of hot cereals is expected to be higher than the cold or RTE cereals owing to higher percentage of nutritional value. Global RTE cereal consumption was estimated to be over 80% of the demand due to hectic lifestyle of the consumers.
North America and Europe account for the majority of the global breakfast cereals consumption on account of inclusion of the finished products as standard breakfast along with consumer awareness and requirement for low fat foods for weight loss. Asia pacific is expected to have a higher growth rate because of the increasing health awareness and changing lifestyle. The breakfast cereal market in china is small as compared to that of the U.S., UK, France and Canada, however, it is expected to expand swiftly over the forecast period.
Key players operating in the global breakfast cereals market are Kellogg Co., Post Holdings, Cereal Partners Worldwide, General Mills, Pepsi Co. Other players include arrowhead mills and nature’s path. Kellogg Co is the global industry leader followed by General Mills and Pepsi Co. The top three players in the market constitute for over 50% of the total revenue. Customer loyalty, brand recognition, knowledge for innovation and economies of scale form the major reasons in influencing the market growth.
Another set of initiatives undertaken by major industry participants includes strategic alliances including joint ventures and acquisitions within the industry value chain. Cereal Partners Worldwide (CPW) is a 50-50 partnership between Nestle and General Mills. CPW is founded as a joint venture to produce and sell ready to eat breakfast cereals. Kellogg acquired an Egypt based company Mass Food Group to expand its market in Egypt and Africa. Post holdings acquired Michael foods which is a diversified food distributor.
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