Cereal makes break from behind 'bars.' - Packaged Foods

Discount Store News, May 6, 1996

Cereal isn't just for breakfast, nor is it restricted to bowls with milk. Raising cereal consumption these days are cereal bars, those handy, foil-wrapped eat-on-the-go foods. They are so popular that sales grew 30.3% last year, according to Chicago-based Information Resources Inc.

Sales, currently tracked only in supermarkets, hit $805 million in 1995. The category growth, which includes granola and snack bars, has not gone unnoticed by discount and drugstore operators. In fact, these operators have rushed to find space in their stores for these highly consumable products, which are now offered by a host of suppliers.

Ark Drug, Mount Vernon, N.Y., for example, added Kellogg's Nutri-Grain bars to its cereal selection recently, while Kmart, Target and Wal-Mart stock them in their snack food sections even though they don't have breakfast cereals on a day-in, day-out basis in traditional stores. Supercenters offer both every day.

Frank Blod, a principal at the New England Consulting Group, Westport, Conn., noted that consumers are attracted to cereal bars because of their convenience. They are "single-serve snack items [that] have great impulse appeal and can often be consumed on the spot," he said.

Pam Becker, spokeswoman for General Mills, said that the company has been getting greater interest from non-food retailers about the company's Nature Valley granola and Sweet Reward snack bars. B.J.'s Wholesale Club, in fact, just added a value pack of Nature Valley, she said, noting that the warehouse clubs want larger pack sizes not available through food stores.

Sam's Club has long carried breakfast bars from various vendors in large packs commonly found in clubs. These include Kellogg's, General Mills and SnackWell's.

Becker sees potential in the Sweet Reward product, which is aimed at the health-conscious consumer.

Kellogg's Nutri-Grain bars, the category's leading brand, continues to benefit from heavy TV advertising and prime shelf space in supermarkets. Kellogg's is also getting distribution in mass outlets for its Rice Krispies Squares, a snack treat targeted at kids. "We get good movement on those, especially with moms who used to have to make their own," Kessler commented.

The category recently received a boost from a new sampling effort from Nabisco. As part of a regional rollout of granola bars and fat-free cereal bars, Nabisco distributed 6 million samples of its Oreo, Chips Ahoy and Nutter Butter granola bars using a unique new pouch sampling technique. A 35-cent coupon was included with the sample.

Nabisco introduced cookie-flavored granola bars in 1994 as part of what it called a "breakfast initiative," which also included its popular SnackWell's fat-free cereal bars. No doubt the SnackWell's cereal bars receive a residual effect from Nabisco's national ad campaign for other SnackWell's products.

"Sales of granola and cereal bars have surged in recent years, making them the fastest-growing part of the breakfast market," said a number of Nabisco sources, adding, "24% of all snacking is done in the morning, more than double the level of 10 years ago."

Ann Smith, a spokeswoman for Nabisco, added that the growth rate for snack bars is 40% in markets where the granola and breakfast bars are available vs. overall market growth of 9%.

"Retailers know the potential," Blod said. "The challenge now will be getting retailers to stock them on a regular basis instead of just in-and-out."

Buyers said that they remain a little skeptical of the long-term success of cereal bars, considering the downturn that European retailers experienced with similar products in the early '90s. The culprit there was concern over cereal bar healthfulness. Becker said, "I think we won't see that mistake here because we're presenting healthy options."