How we sell our cereal around the world
For the majority of Americans, including me, cereal has been a top breakfast choice since childhood. But in many countries around the world, ready-to-eat cereal is still gaining popularity as a go-to option to start the day.
Consider the following fact:
– More than half of worldwide ready-to-eat cereal consumption happens in just six markets – the U.S., Canada, the UK, Ireland, Australia and New Zealand.*
This gap leaves plenty of room for growth in the $28 billion** global ready-to-eat cereal category as per capita consumption of cereal rises in emerging markets.
Outside of North America, General Mills and Nestlé established a 50-50 JV partnership called Cereal Partners Worldwide (CPW) in 1990.
Today, CPW generates more than $2 billion in net sales across more than 130 countries with nearly 5,000 employees. Several of CPW’s strong global brands include Fitness, Nesquick, Cheerios, and Chocapic.
CPW is the number two cereal company globally.
I spoke with Derek Peterssen, associate marketing manager of Emerging Markets for CPW, to learn more about the challenges and opportunities that exist in creating growth for the cereal category in emerging markets.
“CPW has a strong history of successful sales growth and over the last 20 years we have evolved from a mostly European-based organization into a truly global business,” he says.
Understanding the traditional breakfast occasion
CPW’s marketing efforts are designed to drive consumer awareness for the benefits and attributes of cereal, including educating consumers about its nutritional benefits and highlighting its relevance and affordability.
Derek explained to me that breakfast time in many emerging markets is still dominated by the countries’ traditional breakfasts, which tend to be warm and savory dishes prepared in the home by the mom of the household.
However, ready-to-eat cereal is becoming a more popular choice for emerging middle class consumers in global markets as awareness for its benefits grows.
“One common feature across emerging market breakfast tables is that many kids are now starting the day off with a glass of milk as part of their breakfast,” says Derek. “Moms view the milk as nutritious,” he says. “However, kids don’t always like the taste.”
“Here’s where cereals come in, providing mom with the nutrition she’s seeking as well as giving her kids a tasty reason to want to drink milk in the morning.”
CPW has found a number of successful ways to increase the relevancy of breakfast cereal in emerging markets, such as partnerships with milk brands, educating consumers about the benefits of cereal and its nutritional credentials, and offering the right size packages of cereal in each market.
Here are a few examples Peterssen provided on how CPW has played a leadership role in growing the category and boosting its relevancy:
CPW launched in Brazil in the early 1990s. Over the past 20 years the category has grown and CPW has become a strong number two player. One of the successful ways CPW has helped to develop the category is a program called Milk Mates.
Through Milk Mates, CPW partners with Nestle NIDO milk powder on joint TV advertising and cross in-store promotions, like the one shown above, which illustrate the combined benefits of cereal with milk.
Derek says that in many places around the world, consumers perceive ready-to-eat cereals as not as nutritious as culturally traditional breakfasts. CPW uses advertising and in-store displays to address this perception directly by comparing ready-to-eat cereals to traditional breakfasts.
Right Size for the Market
In some emerging markets, a segment of the population shops day-to-day based on daily wages and are looking for smaller package sizes with lower out-of-pocket cost. To address this different shopper need, CPW sells smaller, single-serve packages in several countries in Asia, as well as in Turkey and Brazil.
CPW holds a No. 1 value share position in many important and growing markets, including Turkey, Russia, Poland, and markets across Southeast Asia and Central Europe.
“Personally, I love working on the Emerging Markets business at CPW as we drive growth for the company,” says Derek. “I love going to visit new countries to better understand consumers, the breakfast occasion and how we can help provide a nutrient dense food that can be part of a good breakfast that people love,” he says. “Over the coming years, I look forward to seeing the Emerging Markets portion of our business become an even bigger and more important part of the company.’’
* Annual consumption in kg per person. Source: Euromonitor 2013
**According to Euromonitor 2013