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.
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.
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.
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.
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.
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