Breakfast Cereals in Asia Pacific

February 2020

Asia Pacific has the highest global CAGR for breakfast cereals, driven by hot cereals, muesli and granola, while consumers are concerned about the health positioning of flakes and children’s breakfast cereals. Distribution expansion to reach previously underserved consumer segments also drove growth. Future growth is expected to revolve around improving health positioning and convenience aspects, in addition to expanding flavour profiles that target local favourites.

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Key Findings

Asia Pacific is the fastest growing region in the world for breakfast cereals

A less mature region with rising disposable incomes and internet penetration, Asia Pacific reported the highest CAGR for breakfast cereals over 2014-2019 among all global regions. Consumers in Asia Pacific are seeking out Western breakfast cereals over traditional breakfast fare as they are exposed to more Western influences online. Breakfast cereal manufacturers have also evolved their innovation, putting out flavours that are in line with local tastes in each country and increasing the nutritional and functional benefits of their products. Widening distribution networks to underserved target groups and cities has also helped drive growth.

Muesli and granola is the key growth driver for RTE cereals

Within RTE cereals across Asia Pacific, muesli and granola gained value share at the expense of other RTE cereals, flakes, and children’s breakfast cereals. Perceived as healthy, natural, minimally processed and functional, muesli and granola can be a snack or light meal replacement in addition to a breakfast option. Other RTE cereals, flakes and children’s breakfast cereals are perceived as high in sugar and highly processed, reducing their appeal as consumers become more health conscious.

Hot cereals grew the fastest in India and South Korea

In 2014, hot cereals only accounted for 37% of value sales in breakfast cereals but contributed 42% of absolute value growth over 2014-2019, gaining share from RTE cereals. However, this was driven largely by India and South Korea, while hot cereals lost value share to RTE cereals in other countries. In India, consumers have turned to hot cereals to make traditional dishes such as poha and idli, in addition to porridge. Meanwhile in South Korea, hot cereals benefited from the novelty and a rising oat boom, having been introduced to the country only in 2018.

Future growth to be driven by innovation and distribution

Within less penetrated markets such as India, the Philippines and Pakistan, future growth is expected to stem from channel expansion within existing cities and penetrating tier 2 cities. Innovations will take the form of flavour and texture, catering better to local tastes while keeping price points affordable for mass-market urban consumers. Within highly developed markets such as Japan and South Korea, innovation will target new consumption occasions to drive up demand from existing target groups.

Introduction

Scope
Key findings

Regional Overview

Asia Pacific grew fastest as Western breakfast options become popular
But growth has largely slowed and future growth prospects are moderate
Across Asia Pacific, hot cereals saw strong growth in China and India
However in Southeast Asia, muesli and granola outshone hot cereals
Excluding China and India, RTE cereals gain share from hot cereals
RTE cereals lost share to hot cereals despite higher absolute growth...
…as RTE cereals started from a higher base in 2014
E-commerce gains share from brick-and-mortar channels in China…
…while brick-and-mortar channels are still dominant in other countries

Leading Companies and Brands

Top five companies in each country emerge on top in 2019
Active innovation is the key to market share growth for multinationals...
...while local companies need to be strong in the right market
Rising brands are tapping non-mature categories and new target groups

Forecast Projections

China, India and Japan remain important for future growth in Asia Pacific
India, Philippines and Pakistan also set to show potential

Country Snapshots

China: market context
China: competitive and retail landscape
Japan: market context
Japan: competitive and retail landscape
South Korea: market context
South Korea: competitive and retail landscape
Taiwan: market context
Taiwan: competitive and retail landscape
Thailand: market context
Thailand: competitive and retail landscape
Malaysia: market context
Malaysia: competitive and retail landscape
Indonesia: market context
Indonesia: competitive and retail landscape
India: market context
India: competitive and retail landscape
Singapore: market context
Singapore: competitive and retail landscape
Hong Kong, China: market context
Hong Kong, China: competitive and retail landscape
Philippines: market context
Philippines: competitive and retail landscape
Vietnam: market context
Vietnam: competitive and retail landscape
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