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GROCERY: Cereals: A healthier crunch

Consumers eager to start off the day right should seek out whole grain bread, fat-free milk -- and heaping bowls of Cocoa Pebbles?

While it's not surprising that natural/organic food companies put out cereals that offer such nutritional benefits as less sugar and more fiber, many shoppers still don't associate mainstream cereal brands with better-for-you items. This perception may soon change, however, as heavy hitters such as Post, Kellogg's, and General Mills continue to roll out brand-new selections, extensions of old favorites, and product reformulations to serve as healthier breakfast alternatives.

The chief reason for such product introductions becomes obvious after a glimpse at recent category sales figures. While ready-to-eat cereal dollar sales inched up only 0.2 percent in the last 12 months or so, granola and natural-type cereal, which many shoppers perceive to be healthier, grew 8.8 percent during the same time period. Similarly, unit volume rose a mere 0.3 percent for ready-to-eat items, but increased 6.1 percent for granola and natural-type products. (ACNielsen Strategic Planner for the 52 weeks ending July 15, 2006, for food stores with $2 million and over in sales, excluding supercenters.)

Further, for the 52 weeks ending Dec. 31, 2005, ACNielsen LabelTrends shows a 12.7 percent sales dollar rise for granola and natural-type cereal with a label claiming that the product contains whole grains, and a 35 percent sales dollar spike for granola and natural-type cereal with a label claiming that the product is a good source of fiber.

In a mature category like cereal, such gains aren't being taken lightly. Responding to consumers' desire for more nutritious breakfast fare, manufacturers are increasingly stepping up to the bowl.

"Many companies are trying to reformulate, with products that are made with all whole grain and more fiber and bran, and are fortified with nutrients of concern" such as calcium, magnesium, and potassium, confirms Julie Miller Jones, professor of food safety and nutrition at the College of St. Catherine in Arden Hills, Minn.

Jones additionally cites the growing number of products made with less sugar, as well as more gluten-free items and other recent technological innovations that are finding their way into cereal bowls. "[F]ibers such as inulin and fructooligosaccharides are being added as prebiotics," says Jones. Nutrients used by specific "good" bacteria, prebiotics can be added to the diet to increase the chances of those bacteria thriving in the intestine.

The benefit of all of these products, according to Jones, is that "they add to the fiber in the diet. Americans eat only 12 to 14 grams of fiber a day -- females need 25 grams per day and males need 38 grams per day. Also, the nutrients of concern are just that -- ones that some parts of the population do not get enough of."

These sorts of cereals are more likely to be found now on the shelves of mainstream retailers no longer content to let the Whole Foods and Wild Oats of the world corner this lucrative market.

"While our primary efforts are centered on kid/all-family-type cereals, we have also incorporated healthy/good-for-you types of items on our modular displays to add extra merchandising visibility throughout the store," says Jeff Lowrance, spokesman for Salisbury, N.C.-based Food Lion, which operates over 1,200 stores in 11 Southeast and Mid-Atlantic states. "We are continuing to promote the healthier cereals...with price points that are attractive to our customers. Kraft, General Mills, and Kellogg's have been instrumental in developing product tie-in offers, coupons, and display-ready vehicles centered [on] the healthy cereal segment."

As for assortment, "We've added items from product lines such as Weight Watchers, Kellogg's Organics, and Kashi to provide our consumers healthy alternatives at good everyday retails," notes Lowrance. "Minimal-type discounts are occasionally offered on these types of items to help stimulate trial purchases."

Food Lion also offers several healthier private label cereal alternatives, which Lowrance says provide "exceptional quality at great everyday retails relative to the brand-name targeted cereal items."

New and improved

Category leader Kellogg Co., which in July posted internal sales growth of its retail cereal business of 4 percent, has lately been bolstering its range of cereal products with nutritionally minded items from its Kashi division, based in La Jolla, Calif.

Two brand-new cereals from the producer of natural, minimally processed foods are GOLEAN Crunch! Honey Almond Crunch, an extension of the GOLEAN weight-management product line, and Vive Probiotic Digestive Wellness Cereal (in contrast to prebiotics, probiotics are nutrients containing live "good" bacteria).

Previously, probiotics were available only in a limited number of dairy-based products, such as Dannon's recently introduced Activia yogurt.

Notes Jeff Johnson, senior brand manager for Kashi, "With nine grams of protein and eight grams of fiber, GOLEAN Crunch! Honey Almond Flax has more than twice the protein and fiber of the average cereal, to help [consumers] feel full longer." Johnson adds that Kashi has introduced slant-back displays and end cap promotions to merchandise the item.

The new GOLEAN cereal's ingredient list includes flax seeds, one of the few plant-based sources of omega-3 fatty acids, which research indicates can lower blood pressure, triglycerides, and total cholesterol levels. Additionally, the almonds in the product boost the amount of so-called "healthy" fat per serving.

The benefits of eating cereal containing probiotics can be tangible for consumers with stomach problems, observes Kashi nutritionist Sarah Lowrey. "Digestive ailments, ranging from constipation to colon cancer, affect more than 70 million Americans," says Lowrey. "We recognized that nonperishable food products capable of promoting digestive health beyond just regularity were not available in the marketplace."

But Battle Creek, Mich.-based Kellogg isn't just leaving the better-for-you initiatives to Kashi. The cereal giant, which offers reduced-sugar versions of its Frosted Flakes and Froot Loops varieties, is looking to move into the diet and nutrition department by creating for the iconic Special K cereal brand such extensions as meal bars, snacks, and even water.

Within the cereal section, Kraft-owned Post Cereals has been busy rolling out healthier brand extensions Grape-Nuts Trail Mix Crunch and Honey Bunches of Oats with Cinnamon Clusters, as well as reformulations of its Honeycomb and Fruity and Cocoa Pebbles brands as part of Northfield, Ill.-based Kraft's comprehensive Sensible Solution nutrition labeling program, which, the company explains, "helps consumers easily identify better-for-you choices from among its many products."

Cereals qualifying for the program must be either free of or low in calories, saturated fat, sugar, or sodium, or must have 25 percent less of one of these compared with the base product or an appropriate reference product. The reformulated Pebbles items are now a good source of fiber, while the new Honeycomb is a good source of whole grain, so "moms can feel better about giving them to kids," according to Kraft's senior manager, corporate and government affairs Laurie Guzzinati. Grape-Nuts Trail Mix Crunch and Honey Bunches of Oats with Cinnamon Clusters are also included under the Sensible Solution umbrella.

To launch the latest addition to the venerable Grape-Nuts Brand, the company took a distinctly modern approach: It broke a multiplatform marketing campaign, in partnership with TV Guide and encompassing print, the Internet, and co-branded in-grid banner units, during the March 20 episode of popular reality TV show The Apprentice. The tie-in: Donald Trump's task for the participants was to design billboards to promote the new cereal, with Post executives choosing the winning project.

Minneapolis-based General Mills is also adding brand extensions and new products to its better-for-you portfolio, in the wake of the well-publicized reformulation of its "Big G" cereals to make them good sources of whole grain.

General Mills' newest healthier cereals include Fruity Cheerios, flavored with naturally fruit flavors and fruit juice; Oatmeal Crisp Maple Brown Sugar, featuring ingredients that can help reduce cholesterol and lower the risk of high blood pressure and stroke; and Dora the Explorer Cereal, a good source of fiber, calcium, and whole grain.

The future of healthier cereals for mainstream and niche players alike is limited only by manufacturers' ability to innovate. CPG companies have clearly made nutritious cereals a high priority. As General Mills PR manager Shelly Dvorak notes: "When considering new products and product reformulations, we always focus on the same three things -- taste, nutrition, and value. In the future you can expect this same attention to consumers' interests."
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