09Aug2009

Breakfasts Climb 1.9%

SUPERMARKET SALES OF frozen breakfasts rose 1.9% to $333.1 million in the 12 weeks ended June 14, according to Information Resources, Inc., the Chicago-based market research firm. Units dipped by 5.2%, to 125.6 million.

“Other breakfast foods,” which make up only about a tenth of the category’s total dollars, saved the day by jumping 29.9% to $33.5 million. This sub-category includes things like Pillsbury Toaster Strudel and Kellogg’s new Eggo Bake Shop Twists, (see below), which, working off a tiny base, turned in those multi-million percent increases we somehow always find so amusing. Weight Watchers’ Smart Ones Morning Express also turned in gains above a million percent, under similar circumstances.

Handheld breakfast sandwiches posted decent increases – up by 3.8% to $72.5 million on flat units. Waffles, the largest sub-category, were down by 1.4% to $123.2 million, with units off by 9.7% to 51.7 million.

It’s clear from looking at all sectors of the breakfast category that innovation adding convenience or taste is a ticket to strong sales increases. Within most of the subcategories, there seemed to be more than the usual number of changes in market position among the top 10 brands, with some rising stars (who we tend to root for) gaining share. Our chart shows sales results for the total frozen breakfast category and its sub-categories, along with the topline on fresh eggs. Here are comments from vendors about new items and category trends…

Kellogg Company
Early this year, the Kellogg Company, Battle Creek, Mich., introduced Eggo Bake Shop Twists, the first microwaveable Eggo pastry and the newest offering in the Eggo Bake Shop line, according to company spokesperson Susanne Norwitz. The products combne soft, pull-apart dough sprinkled with sugar crystals and strawberry or apple filling made with real fruit.

At the same time, Kellogg launched its latest variety of Bake Shop Mini Muffin Tops. Bake Shop Mini Muffin Tops Chocolate Chocolate Chip feature the best part of the muffin for chocolate lovers.

Also new this year: Eggo Nutri- Grain Strawberry Filled waffles. Made with six grams of whole grain and real fruit, they are a good source of fiber and calcium.

Last December, the MorningStar Farms brand expanded its breakfast offerings with the launch of maple-flavored veggie sausage patties.

Kellogg has undertaken several initiatives with third-party research partners to better understand optimal category flow, Norwitz says. The research indicates that a segmented set with brand blocks within each segment yields the highest velocities at the category level. The optimal flow for these segments is Sweet Goods -> Pancakes->French Toast->Waffles->Private Label->Traditional/Handheld Entrées, she explains.

“Recent Nielsen data suggests that more than half of consumers are now eating out less and staying home more often,” according to Norwitz. As a result, consumers are increasingly seeking quick and easy meal options for dining at home.

“In addition, more than 75% of people prefer a warm breakfast but many consumers simply don’t have time to bake,” she adds. “We’re embracing these trends with several new options to make breakfasttime even easier for today’s busy consumer.”

CCF Brands
CCF Brands, Fayetteville, Ark., recently added all-natural Buttermilk Pancakes to its frozen Great Day Breakfast line, according to Candice Haines, business development manager. Each 22.5-ounce bag has 18 fully-baked pancakes in three six-count bags. Microwavable and made with real buttermilk, each pancake has 70 calories.

“Convenience is key to the frozen breakfast category,” says Jodie Daniels, vp of marketing. “Retailers will find success with unique and easyto- prepare items that meet theneeds of the core category shoppers who are starved for time.” He urges retailers to promote the frozen breakfast category at the right time of the year, particularly during the back-to-school season when consumption climbs. Display activity and promos at this time produce the greatest return, he notes.

Tonya Merriweather, director of category management, says that at the national level, the Great Day frozen breakfast shopper skews toward low- to middle-income ($20,000-$39,000) families with three or more members. High indexes are also seen among: female heads of households under 44; households with kids (especially aged 13-17); small and large households with kids 6+; consumers in small towns and rural areas; female heads of households employed fulltime; female heads of households with some high school or some college; African-Americans; and white collar, clerical, sales and blue collar households.

Merriweather adds that CCF’s breakfast offerings meet the three most important consumer needs in grab-and-go breakfasts: convenience, taste and price/value.

Eggs
We wouldn’t normally include eggs with the breakfast category, but since they go together, and so much has been happening with them lately, well, it just seems appropriate. Egg prices have been returning to sanity; IRI supermarket data for the 12 weeks ended June 14 show the category down by 11.1% in dollars (to $690.9 million) but up in units by 8.7% (to 370.1 million).

Suppliers say the category still isn’t entirely healthy, however, because some retail pricing strategies are flawed. David Radlo, president of Radlo Foods, Watertown, Mass., is among several who say that some retailers keep longer margins than necessary on higher-priced specialty eggs even after their costs come down.

Vendors agree that the tendency of some retailers is to cut pricing quickly on lower-priced commodity eggs to achieve a price point they believe will drive business. But these retailers are slower to make reductions on higher pricing for specialty eggs, believing that shoppers will buy regardless. That’s simply not true, these vendors say, adding that it hurts the category.

“There is still a challenge for eggs in convincing retailers to expand the case based on the dollar value and inventory turns eggs represent,” Radlo says. “The American Egg Board (www.aeb.org) has been pushing for this over the past few years.”

Dave Holdsworth, director of marketing for Moark (Land O’Lakes Eggs), Norco, Calif., says his company has been doing significant market research on the egg category. The research, including a consumer decision tree, is available to retailer partners of the company. “

We found that assortment decisions often don’t follow consumer purchasing behaviors,” says Holdsworth. “You might not need large and extra large in the same brand, for example, since this is redundant in consumers’ minds. Basically, we’re helping retailers understand the category better so they can make better decisions,” he adds.

Both Moark and Radlo are among the specialty egg suppliers offering “healthier” items, and have launched a variety of new products in recent months.