Consumer’s Shift Toward Nutrition-Focused Product

Overview

After Covid-19, people are changing their food-consuming habits and shifting towards healthier options to keep their health in check. This change in consumption behavior also has a clear effect on the growth of healthy breakfast cereals and healthy snacks.

•According to a report from Allied Market Research from 2021, the market size of global breakfast cereals was USD90.9bn in 2020, and it is expected to grow almost double and reach USD180.3bn by 2030, with a CAGR of 7.1%.  In 2028, the value would be around USD 157 bn.

•It is also important to note that the whole grain and high fiber foods market was valued at USD44.3bn in 2022 and it is expected to reach USD85bn by 2032, with a CAGR of 6.7%. The market value in 2028 would be around USD65bn.

•Healthy snacks market is expected to grow from USD85.6bn in 2021 to USD152.5bn in 2030. Its value in 2028 would be around USD 132.94 bn.

Strategical Change by Global Leading Brands to Tackle the Change in Consumer Behaviour

Shifting  Focus to Muesli, Multi-grain, and Granola in the breakfast cereal Segment.

• Kellogg's, one of the leading brands in the breakfast cereal segment is now shifting its focus to more healthier breakfast options and trying to advertise its products as healthy and rich in nutrients.

•They are providing many facts and information on their website on the importance of consuming whole-grain and multi-grain food.

Setting New Healthy Nutrition target

•In the healthy snacks segment, Unilever, a global leader of the segment has set goals to reduce salt, sugar, and calories from 70% of their portfolio to meet World Health Organization-aligned nutritional standards.

•In 2019, they acquired Graze a healthy snacking brand in the UK to enhance their portfolio of healthy snacks.

INDIA

Key Trends

•In 2023, the Breakfast Cereals segment will generate USD5.06bn in revenue. The market is anticipated to expand by 7.24% yearly (CAGR 2023-2027).

Change in Preference

•An Avendus study suggests that India is seeing a wave of health-conscious consumers who are influencing a structural shift in food preferences. By 2026, it predicts that spending on healthy foods per person will have increased 2x.

Changing Strategy as Per the Consumer

•According to a Mintel study, clean-label snacks made up 19% of all snacks introduced in India between February 2020 and January 2021, compared to 21% between January 2016 and January 2017.

•The most significant statement made in this instance of clean labeling is "No additives or preservatives."

Fastest Growing Health-Focused Food Market

•A report from Avendus indicated that India is the fastest growing health food market expanding at 20% CAGR, which is 3x the global average, estimating a market size of USD30bn in the next 5 years.

Drivers of Growth

Government Support

•The government is working with key market players to conduct online campaigns. For instance, in March 2021, PepsiCo India and United Way Delhi launched a program to raise awareness of the value of whole grains and a wholesome diet.

People are More Focused on Health

•After the pandemic, 70% of Indians said they will focus on improving their overall health by prioritizing dietary changes.

•Also, from 108mn in 2020, the number of health-conscious consumers is expected to increase to 176mn in 2026.

Change in Lifestyle

•A state of snacking report from Mondelez found that 81% of respondents said they substitute snacks for at least one meal each day and 85% feel that there should be more healthy snack options.

•Also, the availability of healthy options through online channels such as Blinkit, and Instamart, plays a huge role in the growth of the segment.

Barrier to Growth

High Cost of Healthy Foods

•Price of healthy cereals or wholegrain items, and healthy snacking items in much more than a regular snacking option.

Such as

The average pack of chocolate costs around USD0.24 and the average price of a healthy breakfast bar is around USD0.73.

The Average price of a regular 1kg cereal (cornflakes) pack is around USD3.66 and the average price of a healthy cereal option such as muesli is around USD6.09 – USD7.31.

A large Part of the Population is Still Not Able to Afford Basic Nutritious Food

•In 2020, over 970mn Indians, or roughly 71% of the population, were unable to afford nutritious food.

Competitive Overview

Strategies of Established Players to Satisfy the Changing Needs of Consumers

Branding Smartly

•Kellogg's India introduced 'Kellogg's Pro Muesli,' a high protein, plant-based muesli, in October 2022. Kellogg's Pro Muesli with 200 mL milk meets 29% of an adult's (sedentary woman's) daily protein requirement.

•Kellogg's also introduces Froot Loops, a multigrain cereal made from corn, wheat, and oats, in August 2021.

•Quacker Oats, a PepsiCo brand, introduces Quacker Oats Muesli in September 2022. Fruits, nuts, and seeds have been added to the product. The product comes in two flavors: Fruit & Nut and Berries & Seeds.

Launching New Products

•Kellogg's introduced their own energy bar K Energy Bars.

•Tata Soulfull has Ragi Bites Snacks.

Strategies of New Players to Satisfy the Changing Needs of Consumers

Protein Based  and Organic Snacks

•Brands such as Rite Bite and Yoga Bar of Sproutlife Foods provide protein-based snack options such as protein bars, breakfast bars, protein cookies, protein chips, etc.

•Other new brands are focused on providing healthy snacks which are also natural and organic. Brands such as The Whole Truth provides clean, whole, and unprocessed food with high protein proportions.

USA

Key Trends

•In 2023, the Breakfast Cereals segment will generate USD21.32bn in revenue. The market is anticipated to grow by CAGR 2.02% annually till CAGR 2027.

•Also in 2022, the U.S. cereal industry had a market size of USD20.59 bn, and it is projected to grow at a CAGR of 2.33% through 2027.

Rise in Ready to Eat Food and Snack Bars

•Due to the convenience it provides to consumers and their hectic lifestyle, ready-to-eat breakfast cereal (especially whole grain cereal)  and healthy snack bars(mostly protein bars)  are dominates the entire market..

•In fact, the healthy snacking market is expected to grow from USD0.95bn in 2021 to USD1.14bn in 2025, with a CAGR of 4.71%.

Focus on Sustainability

•Consumers are becoming increasingly aware of the environmental impact of their food choices. So, many companies are responding to this trend by incorporating more sustainable practices into their operations. Such as Kellogg's has committed to reducing greenhouse gas emissions by 65% by 2050, and General Mills pledged to make their packaging 100% recyclable by 2025.

Rise in Popularity of Organic and Plant Based Food

•With the growing vegan trend and use of organic ingredients in food there is a shift in consumer behavior, which is resulting in higher adoption of products made from plant sources.

•Brands such as Kellogg's and General Mills have introduced multiple snacks, snack bars, and cereal which are either plat based or made from organic substances.

Drivers of Growth

Increased Participation in Sports

•Sports and athletics have grown significantly in recent years in the US, which has increased consumer demand for nutrient-dense foods in smaller serving sizes. In 2021, 232.6mn Americans participated in sports and fitness activities, the most since 2016, according to the Sports & Fitness Industry Association and Sports Marketing Surveys.

•As a result, whole grain cereals and energy and nutrition or protein snack bars are significant drivers of market expansion.

Traditional Breakfast

•Cereal has been a stable in American breakfast throughout the years, and the introduction of healthier options has made sure it stays this way.

•In 2022, US citizens ate around 2.7bn boxes of cereal.

Barriers to Growth

Effect of Inflation

•In March 2023, the Inflation rate was 4.98%, which is more than the long-term average of 3.28%. Because of the rise in prices of several items, people are more keen on buying essential goods.

•In a recent survey Fresh n Lean found that nearly 75% of Americans want to eat healthy but can not afford it.

Taste is King

•Although the popularity of healthy snacking and healthy breakfast is increasing majority of Americans still prefer taste over health.

•According to a 2017 Food Industry Executive survey, 84% of consumers cited taste as their main motivator for making a purchase.

•60–70% of the US population, according to the American Heart Association (AHA) Trusted Source, is either overweight or obese, increasing their risk of developing heart disease, stroke, high blood pressure, and diabetes.

Competitive Overview

Strategies of Established Players to Satisfy the Changing Needs of Consumer

Focusing on Protein

•As high protein on-the-go food has become a staple part of breakfast lunch and dinner, major companies are either launching their own version of protein snack bars or acquiring such companies.

•Mars unveiled the Hi Protein bar in December 2022 under the Snickers brand. Each bar contains four grams of sugar and 20 grams of protein.

•A line of convenient protein snack bars was introduced in June 2022 by Kellogg's SPECIAL K. The snack bar has 90 calories and 6 grams of protein per bar.

•In June 2022, Mondelez International, Inc. announced that it had reached an agreement to acquire Clif Bar & Company, a producer of nutrient-dense energy bars made with organic ingredients.

Strategies of New Players to Satisfy the Changing Needs of Consumer

Low Sugar More Protein and Targeted Advertisement

•Brands such as Seven Sundays, Catalina Crunch, and Three Wishes market their product as low in sugar and high in protein to cater to a young population who are more conscious about their health.

•They advertise their product via famous fitness You Tuber to reach their targeted consumers.

•These companies also provide a subscription, in which they send different flavor packs every month to their consumers at a discounted price.