Breakfast Cereal Manufacturing

Breakfast Cereal Manufacturing

Brief Excerpt from Industry Overview Chapter:

Companies in this industry make ready-to-serve packaged cereal and cereals such as oatmeal and farina that must be cooked prior to eating. Major companies include General Mills, Kellogg, Post Consumer Brands, Quaker (owned by PepsiCo), and TreeHouse Foods (all based in the US); along with Cereal Partners Worldwide, a joint venture between General Mills and Nestlé (Switzerland) and The Jordans & Ryvita Company (the UK).

COMPETITIVE LANDSCAPE

Demand is driven by demographics and health considerations, particularly the attitudes of busy families and working professionals toward the first meal of the day. The profitability of individual companies depends on managing raw material costs, operating efficiently, and maximizing retail shelf space. Large companies have advantages in purchasing, distribution, and marketing. Small operations can compete effectively by manufacturing cereals that emphasize organic or healthful ingredients. The US industry is highly concentrated: the top four companies account for about 80% of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

The industry's major product is ready-to-eat (RTE) cereal (about 90%). The most popular cereals are made with corn flakes, wheat, oats, mixed grains, or puffed rice. Other products (about 10%) include instant hot cereal, rolled oats, farina, and infant cereal. Many companies are further diversifying their product lines by introducing new cereal bars, snack mixes, toaster pastries, and other co-branded foods.