What’s fuelling the popularity of breakfast cereals in India?

“While we can attribute the growth of the category to a relatively lower base as compared to other categories like biscuits and beverages, post-pandemic, there has been a significant switch from consumers who intend to improve their lifestyle,” said Aditya Bagri, director, Bagrry’s India.

Traditional breakfast fare

Compared to cereals, the market for wet idli-dosa batter, a traditional breakfast fare, is estimated around Rs 1,500-4000 crore, according to various industry estimates.

Only 5-10 percent of this market in India is organised. Traditional fare, such as upma, poha, dosa and idli, made at home are still the preferred breakfast options in India.

Growing penetration

Older players in the breakfast cereals segment, such as Kellogg’s and Bagrry’s, and newer ones like Tata Consumer Products (Tata Soulfull), too, have seen an increase in market penetration of late.

Tata Consumer Products acquired Tata Soulfull, a startup, in 2021.

According to Prashant Peres, managing director, South Asia, Kellogg, the penetration for the company’s overall ready-to-eat category increased from 8 percent in June 2020 on a moving annual total basis (MAT) to 9 percent in June 2021, and further to 14 percent in June 2022, owing to an over 60 percent increase in the number of households in June 2022 versus a year ago, according to Kantar World Panel's household panel data.

Kantar Worldpanel is a London-based company which has expertise in understanding global shopper and consumer behaviour.

Household penetration is defined as the share of total households reached within a geographical area by a product. Hence, if 8 percent of total Indian households were consuming Kellogg’s cereals in 2020, the figure increased to 14 percent in 2022.

Kellogg’s, according to industry sources, is the largest player in the Indian breakfast cereals market, with over 50 percent share.

PepsiCo (Quaker Oats), Marico (Saffola Oats), Bagrry’s and Hindustan Unilever (Horlicks Oats) are the other major players in the segment. Tata Consumer Products also operates in the category.

The relatively new Tata Soulfull also claims to be growing rapidly on increased health consciousness.

“The overall breakfast cereals industry has witnessed strong double-digit growth over the last couple of years. Tata Soulfull has grown faster than the industry,” said Prashant Parameswaran, MD and CEO of the company said.

Parameswaran, too, outlines growing household penetration of the category, especially in the urban markets and a strong trend towards health and wellness, post-pandemic, as the reasons for this growth.

The companies in the segment are also rapidly expanding distribution and launching smaller stock-keeping units (SKUs) to further push this growth. Baggry’s, for instance, has added 20,000 more distributors in the last two years and now has 70,000 distributors in the country. According to Bagri, the company is also focusing on smaller packs of Rs 10 to tap general trade stores and drive adoption in semi-urban areas.

The breakfast cereals so far remain a category largely consumed by urban India.

New-found superfoods

The emergence of new product categories like oats and muesli has also led to the growing popularity of cereals in the country.

These products are often tagged as superfoods by nutritionists and fitness freaks and have swamped the breakfast cereals market in urban centres.

According to the management consulting firm Praxis Global Alliance, oats has been seeing a 24 percent growth in the past few years, outstripping the entire category.

“Oats has been promoted by several packaged food companies as a nutritious and wholesome meal, of late. The fact that it can be consumed in both sweet and savoury forms has also led to its growth in the country,” said Rajat Tuli, a partner at management consulting firm Kearney.

Muesli finding more takers

“Muesli is a young sub-category in India. Despite this, it forms one third of the overall breakfast cereal category and is growing in double digits year on year. We are market leaders and enjoy more than 70 percent share of the muesli category in value terms (MAT August 2022 vs year ago),” said Sumit Mathur, senior director marketing, Kellogg.

To tap this trend, companies are launching products which have oats and muesli in them. Kellogg’s, PepsiCo and Tata Soulfull have, of late, launched various products to tap this segment. Earlier this month, Kellogg’s launched the plant-based Pro Muesli in India, while PepsiCo introduced Quaker Oats Muesli. Tata Consumer Products, too, has launched a cereal product with millet and muesli.