Cereals: the beloved breakfast solution that forms part of many South Africans' morning routines. Recently, we have seen a drive for cereals that have expanded beyond traditional breakfast flakes or porridge. Although habits and eating occasions may have changed, cereals persistently continue to stay at the top despite COVID-19 and immense economic pressures, remaining dynamic and performing across various sub-categories. As the South African customer has particular habits and expectations in shopping in this category, Daymon has conducted a research study to establish the "how's" and "why's" behind their approaches and choices. Research has revealed the following.
South Africa's breakfast cereals are currently seeing 6.9% value growth while we are still in COVID-19 recovery. There is a promising forecasted growth (CAGR 2021-2026) for the category, especially for Flaked Cereals (8.9%), Muesli & Granola (7.5%), and Kids' Cereals (6.5%). The growth observed and forecasted is based on the diverse nature of this category, where the observations and shifts within cereals can be summarised as follows:
Consumption Occasions
Consumption occasions have increased due to the convenience of the category and customers eating cereals beyond breakfast as consumers are 'grazing' or snacking more often.
Daymon Trend: AlwaysON
Health
With health no longer being a trend but a set behaviour, customers are looking for health within everyday occasions, whether actual Health or perceived Health - cereals can tend to this consumer need based on the nature of the category.
Daymon Trend: B-Well
Indulgence
Consumers still enjoy indulgence in cereals, whether as part of health or on their own. Examples are chocolate clusters in granola or rich flavours in chocolate malt cereals.
Daymon Trend: JOYment
Newness and Excitement
Customers consistently look for excitement in stores and products, whether new flavours, pack sizes, formats or consumption occasions. This has been heightened by COVID-19 lockdowns and customers looking toward products for excitement.
Daymon Trend: JOYment
Affordability
The past two years have been characterised by economic pressures, pressed even further due to recent global turmoil on the supply of staples. Affordability will remain critical, especially under the current looming circumstances.
Daymon Trend: ValueMatters
Fig 1. Daymon Global Trendwheel™
Consumption & Shopping Habits
47% of customers enjoy cereal products daily, whether for breakfast or other occasions. As mentioned, the consumption of cereals has long surpassed breakfast occasions, with 36% of the panel survey indicating that they eat cereals beyond breakfast and that it has become a snacking solution. More than 70% of consumers surveyed indicated that they have more than three types of cereals at home, all indicators of a consumer need for cereals and certainly an exciting indicator for brands and manufacturers. 88% of customers buy breakfast cereals for themselves/partners and 91% for kids - it is vital to note that there are also influencers to these purchasing decisions. The key influencers within a household decide which products are purchased, as seen in the Image below:
Fig 2. Deciding individuals in which cereals get purchased.
Kids & Cereals
The key to success in kids' cereals is appealing to kids and speaking to the critical considerations of mom and dad. A surprising 36% of consumers indicated that their kids are vital influencers in deciding what cereals get purchased. Kids are picky eaters, and this creates specific considerations for brands. While there may be characteristics that may be key for parents to consider, e.g. reduced sugar, high fibre and other nutrition-related needs, kids will likely ultimately decide whether they will eat the cereal. For this reason, the deciding factor is high. For parents, when considering decisions for kids' cereals, the top 3 factors in deciding to buy a new type of cereal for their kids are nutritional value (64%), affordability (49%) and ingredients (44%).
Brands & Private Brands
We are increasingly seeing brand agnosticism in various categories, mainly driven by smaller brands and retailers expanding their Private Brands. Private Brands are noted for being more affordable and able to innovate and provide newness to customers at a higher rate than national brands. Cereals are no different, and while there may be a strong association and preference to a specific brand (64%), 30% of respondents indicated that cereal type and flavour have a more significant influence than, for example, branding, when selecting a breakfast cereal. Unsurprisingly, more than half of the customers (57%) said they had bought a Private Brand cereal before.
Knowing how Private Brands are essential to retailer strategies, more innovation and excitement in this space can be expected. Commercial data and customer sentiment has indicated the migration from national brands to Private Brands in South Africa, where national brands are 0,7% (YoY, 2020 vs 2021), and Private Brands at 57,3%, even though coming from a lower base at 16,2% share. In 2021, globally, 18,5% of all cereals launched were Private Brands, and for South Africa, 26,6% of all breakfast cereal launches were Private Brands.
"I have purchased Private Brand cereals a lot since my family, and I like to experience new brands' tastes."
While Private Brands and national brands can compete on price and innovation, national brands have one unique selling proposition: heritage. Certain brands are known better and preferred by consumers. The most preferred national brands are Kellogg's (68%), Jungle (57%) and Bokomo (53%), with 28% of consumers agreeing that Kellogg's is a heritage brand. Although national brands have built a loyal customer base, they are quickly losing their customers to Private Brand competitors, who can offer similar and more innovative options, often at more affordable prices.
Purchasing Influencers
As in most categories, specific attributes, considerations, or influences can convince customers to switch to another brand or product. The most prevalent factors that may sway customers' buying decisions to try a new product within the cereal category are:
|
ValueMatters |
|
JOYment |
|
B-Well |
|
Always On |
|
ValueMatters |
Customers have indicated that promotions are exceptionally influential in encouraging their purchasing behaviours. As a product purchased monthly, it is no surprise that promotions within the cereals category significantly influence buying behaviour, with 78% of customers saying they would be willing to switch to another product due to promotion. Retailers and brands need to keep promotions' commercial implications in mind to remain profitable, especially under the current economic climate. Promotions are one of the critical focuses for South African shoppers.
Although customers seem to look for healthier products, are outspoken about the high sugar levels and identify the brands they perceive as healthy, brand loyalty and pricing remain critical purchasing decisions. However, combining the right mix of innovation, flavour, health, marketing/promotion, and value pricing may be a solution to encouraging consumers to step over the safety net of the "known" and attempt the "unknown".
Cereals are a continuously growing category with a promising future ahead of it. Which brand player will remain in the race will depend on how well they read and understand the South African customer within the markets and categories they participate. It remains essential for retailers, brands and manufacturers to understand the customer decision-making process behind a category and place the customer at the centre of the development when expanding ranges and flavours.
For more information – look out for our Article on Cereals in South Africa – Published in September 2022.
Sources:
Daymon. Proprietary Customer Research, South African Customer, LSM 7-10, n = 1000, Feb 2022
Euromonitor. (2021). Breakfast Cereals in South Africa: Country Report
About Daymon
Globally, Daymon is known for building brands, with our key focus on building Private Brands. We are the only solution provider that influences all aspects of Private Brand development, from strategy to execution to consumer engagement.
Our unique approach helps retailers and brands set themselves apart — boosting brand presence, category effectiveness, and speed to shelf. We offer a full suite of best-in-class brand development services, including Brand Strategy, Category Solutions, Business Intelligence, Analytics, Client Services, Sourcing, and Brand Engagement. For more information, visit the Daymon partner page here or visit https://www.daymon.com.
Authors:
- Roelien Havenga – Director of Business Intelligence (Africa & Latin America) – roelien.havenga@daymon.com
- Bianka Bothma – Daymon Business Intelligence Analyst - bianka.bothma@daymon.com
- Chrystle-Dee Grey – Daymon Business Intelligence Analyst - chrystledee.gray@daymon.com
Trade Intelligence proudly partnering with Daymon, in our mission to inform effective and profitable retailer-supplier trading relationships