From humble beginnings, cereal bars have taken the UK market by storm. Catering to consumers' desire for both healthy and convenience food, they are perceived as ticking both boxes. While some brands may be laden with hidden sugars and fats, many cereal bars provide a healthier snacking option. Because of this, they have become much-loved by parents desperate to find tasty yet healthy snacks for their children. As a result, cereal bars have moved beyond their original concept of being an alternative to breakfast, to being offered instead of crisps or sweets.
The popularity of cereal bars has increased rapidly over the past few years and there has been a raft of entrants to the market. As a result, the range of ingredients, sizes and formats has become more varied.
This has led to greater competition for shelf space, and is likely to lead to consolidation in the sector, which reached a value of £287m in 2007, according to Mintel. This represents growth of 66% since 2002, while volume sales have increased by about 5%-7% year on year.
A major trend has been the increase in the number of products containing premium, natural ingredients and no artificial additives. This has boosted the organic segment, and some manufacturers have added more fruit that can be counted toward the government's recommended five-a-day. Some recipes now include superfoods such as blueberries or functional foods such as prebiotics.
Kellogg kicked off the cereal bar market when it introduced Nutri-Grain in 1997, targeting consumers who would otherwise skip breakfast. However, the number of people missing meals has plateaued and was about 14% in 2007, according to TGI. This has led brands to position their cereal bars as snacks rather than breakfast alternatives.
During the week, consumption of cereal bars peaks at breakfast-time, lunchtime and early evening, with secondary peaks in mid-morning and mid-afternoon. However, at weekends they tend to be eaten as a post-sport snack.
This market is highly fragmented and the top 10 brands account for less than two-thirds of the market. However, the three leading manufacturers - all from the breakfast market, Kellogg, Weetabix and Jordans - account for most sales.
Kellogg's Nutri-Grain soft-baked bars remain the market leader, boosted by high levels of brand awareness and significant advertising support. The range was reformulated in 2007 to include wheat, wholegrain oats and fruit.
Its Elevenses variant, meanwhile, is marketed specifically as a mid-morning snack, while its Special K bars target women and dieters. The latter's Bliss Bars variant with fixed 90-calorie portions also appeal to those trying to lose weight, while Mini Breaks, introduced in June 2007, also offer portion control, but in bite-sized formats for sharing or for snacking. Kellogg's cereal extensions, such as Coco Pops and Rice Krispies bars, are aimed at the children's market.
Jordans positions many of its bars as going 'back to nature' and promotes the fact that its ingredients come from Conservation Grade farmers, who take 10% of their farmland out of food cultivation to provide a habitat for wildlife. Last year it debuted Frusli All Fruit Bars, which count as a portion of fruit.
In the organic arena, key players include Seeds of Change and The Village Bakery, while Northumbrian Fine Foods' Geobars positions itself on its Fairtrade credentials.
Although many brands compete in the healthier-eating and children's arenas, some are catering to the indulgence market. Cadbury's Green & Black's brand debuted last year with fruit, nut and seed bars dipped in its 70% dark chocolate.
Although cereal bars are growing in popularity as a snack, most sales continue to be accounted for by multiples, as shoppers tend to buy multipacks as part of their weekly shop, rather than picking up single bars on impulse.
However, despite their success, only about a third of the population eat them, so there is ample scope for growth. Men are less likely to buy them than women and older shoppers remain unconvinced. Manufacturers should work hard to introduce products that appeal to this fast-expanding demographic.
A future issue for manufacturers will be the level to which their bars are perceived as healthy. Consumers are becoming more adept at analysing ingredients, and so will make purchasing decisions based on which bars fair best.
Growth is expected to continue in this sector, with value sales increasing by 46% at current prices from 2007 to 2012. This will take it to £420m by 2012, according to Mintel. When food inflation is taken into consideration, growth during this period is expected to be about 35% - slightly lower than seen in the previous five years.
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Analyst comment
Fizzah Kazmi. Research analyst UK and Ireland, Euromonitor International
With rising global food prices, breakfast bars could find them-selves fighting to remain on consumers' shopping lists.
Cereal bars have grown in popularity over recent years. Their original positioning as an on-the-go breakfast replacement has been extended to a 'healthier' alternative to chocolate, or as an energy-booster, providing huge scope for the development of sub-categories and flavours.
However, as breakfast bars are by no means a staple, their popularity may dwindle as consumers tighten their belts as food bill rise due to the rise in cereal prices. These costs must either be absorbed by manufacturers or retailers, or passed on to the consumer. The latter could have a detrimental effect on the breakfast-bar market.
Growth in the sector is forecast to slow to 1.42% in value terms from 2008 to 2013, compared with the sector's previous growth of 6.42% from 2003 to 2008. This could be as a result of rising unit prices, but also an effect of the saturation of the market - consumers are becoming confused by the many different products available.
Manufacturers are paying closer attention to the healthy-eating trend and Bakehouse, for example, has launched 'Booster Bars' - bread bars filled with whole food ingredients and 'superfoods' such as cranberries and blueberries.
Nonetheless, breakfast bars have come under fire. Revelations of comparatively high sugar levels have negated the healthy image of the sector.
As the market becomes saturated, innovation and diversification will be key at this pivotal time in the food industry.