Oatmeal is hot, thanks to its convenience and health halo

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Dive Brief:

  • Hot cereal and oatmeal sales jumped 1.3% to $1.3 million in the 52 week period ending Dec. 30, 2018 compared to the same period a year ago, according to data from IRI reported by Food Business News. At the same time, overall unit sales are down 0.7% to $484,549,330. 
  • The four biggest hot cereal purveyors — Quaker, B&G, Post and Bob’s Red Mill Natural Foods — all posted sales growth. The only reported dip came from private label items, which experienced a 4.7% decline in sales during the same period. 
  • Bob’s Red Mill Natural Foods led the pack with an 11.3% increase in dollar sales and a 13.3% in unit sales. The company produces popular microwavable, single-serving, gluten-free oatmeals in classic and modern flavors. 

Dive Insight:

The last several years have seen the slow rise in popularity of this classic hot breakfast staple as consumers clamor for healthy and convenient options. This increase comes as consumers have turned away from traditional cold cereals in recent years, claiming it takes too much effort.  

To help consumers bypass the need for any preparation and cater to the growing need for convenience, CPG companies are producing single-serve cups of oats that simply require a dose of water and a few minutes in the microwave, or overnight in the refrigerator. Although these are relatively new product on the shelves, unit sales for oatmeal jumped nearly 2% in 2016. That year, Bob’s Red Mill posted a 13% jump in sales of its better-for-you oatmeal options. Once again, the company showed double-digit sales growth for 2018, indicating consumer demand for health and convenience shows no signs of slowing, especially if the product has a shiny health halo.

With such rapid growth in the segment, other companies have started launching their own products into the now-crowded​ market. Beyond the big players, there is Nature’s Path with inventive organic varieties like Coconut Cashew; Purely Elizabeth, which leans on exotic fruits and spices with flavors like Raspberry Pitaya to grab consumers’ attention; and Straw Propeller, which offers a host of different flavors including Indian Curry and Moroccan Spice. There is also Better Oats oatmeal, which, although a smaller brand, posted dollar sales growth of nearly 5% last year. Their Raw Pure and Simple line had particularly standout growth with an almost 8% increase.

Despite a promising upward trend to ring in the new year, oatmeal is going to need to find new ways to differentiate itself to keep consumers eating. With so many flavor options becoming available, perhaps some functional add-in ingredients — a segment which grew at a 6.5% CAGR in the U.S in 2017 — would be a beneficial way to stand out. Another option would be to develop a single-serve container that is environmentally friendly, since it is only a matter of time before these single-portion oats face criticism about waste, similar to the lingering concerns over Keurig and its K-Cups.

If manufacturers in this space can offer additional benefits outside of convenience and good taste, there is a strong likelihood that demand for these products will continue. Especially in light of the decline of the other traditional cold breakfast alternatives, which saw 1.5% decline in sales over the 52-week period ending Nov. 4, 2018, the field is wide open for hot cereal and oatmeal to take a big bite of the morning nutrition segment.

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