The breakfast cereal market - Italy

1.2 The global market

The global breakfast cereal market has been growing in the past decade and is expected to continue this trend, reaching a value of **.** billion USD in ****.

The market was valued at **.* billion USD in **** and grew to **.* billion USD in ****. In addition to this, it is expected to grow at a CAGR of *.*% in ****, reaching **.** billion USD.

The growth is mainly due to the companies rearranging their operations and recovering from the COVID-** impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges.

World, ****, in billion USD and %

1.3 The Italian domestic market

In ****, the Italian market for ready-to-eat breakfast cereals and cereal bars covered a total sales volume of **,*** tonnes, up **% on the previous year, when sales volume amounted to **,*** tonnes. In this context, the market for ready-to-eat breakfast cereals amounted to **,*** tonnes for a value of ***.* million euros, while the volume of that for cereal-based bars was *,*** tonnes (***), for a value of around ** million euros, up more than **% on ****. 

Breakfast cereal domestic market size and sales volume Italy, ****, in thousands of tonnes and millions of euros Source: ****

1.4 Exports and imports of breakfast cereals

Breakfast cereals are referred to by the UNComtrade database as "food preparation, cereal products" and are associated with the commodity code ******. 

The market relies mainly on exports, which in **** amounted to more than ** million USD. Instead, imports were valued at **.* million USD.  The coverage rate expresses the importance of exports over imports, in fact, as the graph shows, it varies between *** and more than ***%, indicate a high trade balance.

Evolution of imports and exports of breakfast cereal Italy, ****, in millions of USD and %  

The graph shows clearly that both imports and exports of breakfast cereals have been rising over the past * years, and even in ****, the Covid pandemic not only didn't slow down international exports, but it lead it to a growth of **%. Imports increased from ** million USD in **** to **.* million USD in ****, with a CAGR of *.*%. Exports followed the same trend, going from **.* million USD in **** to ** million USD in ****.  

Imports countries of origin Italy, ****, in % Source: ****

 Italy's imports of breakfast cereal come mainly from European countries. Germany represents the first importer, with a share of **.*%, and is followed by Spin and France, which hold respectively **.*% and **.*% of the import market. It is also interesting to underline how Thailand ...

1.5 The impact of Covid-19 on breakfast cereal

Contrary to most other goods, breakfast cereals have experienced positive growth in ****.

The strict restrictions imposed by the Italian government forced the population to spend several months in their homes.In this context, a good habit such as breakfast gained attention and value. The impossibility of eating out, the search for healthy foods to get the day off to a good start, the discovery of the first meal of the day as a family get-together all worked to increase the time devoted to this moment.

Variation of annual expenditure on breakfast product Italy, ****, in % Source: ****

In this period, Kellogg served as a leader and reinforced its leadership position by contributing **% to category growth and posting a +*.*% performance in value. Successful brands such as Coco Pops, Extra, and Corn Flakes grew at +**.*%, +**.*%, and +**% in value respectively. Special K and Krave also had a good performance, with a growth of *.*% and *.*% respectively in value terms.

The average time spent eating breakfast also increased. Disposing of so much time during the day caused families with children, young couples, or singles during the lockdown to extend their breakfast time by more than **%.

However, the production of breakfast cereals slowed in these months, as most industries ...

2.1 Italians' breakfast habits

Breakfast has always had a role in the Italian lifestyle: according to  Kellog's research in ****, Italy was the first country in Europe in terms of population that has breakfast.

The map below synthesizes the share of the population that has an adequate breakfast every day (***). The whole country shows very high numbers, with the lowest being more than **%, confirming the importance of the meal in the country. However, Italy is a complex country that includes many different cultures and traditions. This also clearly affects the food habits in the different regions.

As can be seen, the highest propensity for having a satisfactory breakfast is found in the Center of Italy. It is here that the most elevated rates are recorded. The most noteworthy is in Umbria, where **.* percent of individuals eat a good breakfast. This figure is ** percentage points higher than that recorded in Campania, where just **.*% of occupants have a satisfactory breakfast. The South shows lower percentages than the North, with the island and Campania being the lowest.

Percentage of population that consumes an adequate breakfast

Italy, ****, in %

Source: ****

 In general, breakfast as a habit is more and more appreciated and adopted in people's routines. The meal has been ...

2.2 The role of cereal in Italians' breakfast

According to Unione Food Italiana, bread and toasts with or without jam or honey on top are the still Italians' favorite breakfast item, followed by biscuits and brioches, preferred by **% of the population. This can be explained by the fact that these foods, although less healthy, are part of the Italian traditional breakfast. However, yogurt and cereal have been gaining increasing attention in the last years, as they represent lighter and healthier solutions, which are also faster to prepare.

Italian's breakfast preferences Italy, ****, in % Source: ****

 The graph below shows the change in average monthly household expenditure on breakfast cereal across the selected period, from **** to ****. An increasing trend can clearly be found, as families spent only *.* euros per month on breakfast cereal, while in **** the value rose to *.*. **** shows a slight decrease in the trend, compared to the previous year, however still represents a ** cent increase than ****. 

This data confirms the change in habits that has been taking place in the past years. Italians are more and more conscious of what they eat and are willing to spend more to ensure that their health standards are met. 

Evolution of average monthly household expenditure on breakfast cereal Italy, ****, in euros Source: ****

2.3 Drivers of the growing demand for cereals

A food that is ready to be eaten

Collaborative millennials now represent the largest demographic in Western labor markets and, thus, have become the catalyst for retailers to change their commercial strategies.

With their busy calendars, these consumers often have a preference for healthy food to eat on the fly, but don't want to spend time washing, peeling, or cutting up fresh produce. Foods RTE, Ready To Eat, have been growing steadily in the last years, along with the increasing demand by consumers.

This has a very positive impact on breakfast cereal: an RTE product, which doesn't need to be cooked to prepared to be eaten and is ready in seconds.

A healthy solution to start the day

Cereals are rich in fiber, protein, and, in particular, carbohydrates. They are often suggested by nutritionists as a perfect way to start a healthy breakfast that provides us with the energy needed to face the day. As shown in section *.*, cereal manufacturers have been adapting the composition of the product to adapt it to new health standards, by decreasing sugar and increasing fibers and proteins.Consumers are also paying more attention to bioproducts. 

The table below shows the growth of sales of bioproducts ...

3.1 The value chain of the market

The value chain and organization of the market are synthesized below.

3.2 Major players of the market

The major payers of the market are mostly multinationals of the agro-food business. The market is fragmented and highly competitive, as multinational brands such as Nestlè and Kellog's face competition from both self-producing supermarkets, such as Conad and Carrefour and specialized minor stores.

Major players such as Barilla and Cameo (***) play an important role in the market through their specialized sub-brands. Barilla produces cereal through Gran Cereale, Cameo via Vitalis, while multinational Nestlè produces through its own brands like Nestlè Cereal and Fitness, and through a partnership with General Mills: Cereal Partners Worldwide. 

Kellogg's is the first producer in Italy and it provides a more specialized and wider selection of products, which allows it to keep its leading role in the country.

Market share Italy, ****, in % Source: ****

3.3 Organization of cereal processing enterprises

 The graph below is a breakdown by legal form of the **** Italian enterprises specialized in cereal processing, the second step in the production of breakfast ready-to-eat cereal. 

As the graph shows, the great majority of these kinds of enterprises are constituted by individual entrepreneurs, about **% of the total. Limited liability companies are also a very popular legal structure in the sector. General partnerships represent **.*% of the pie and only *.*% of companies are in the form of corporations.

Legal structure of cereal processing enterprises Italy, ****, in % Source: ****

 This suggests that the majority of enterprises of the sector are small and medium enterprises, and the graph below confirms this. Only *** of the **** companies have more than * employees, and none of them has more than **. Almost **% of them have from * to * employees, a data that shows one more the role of individual entrepreneurs in the sector. 

Number of employed people per enterprise Italy, ****, in number of enterprises Source: Istat  

3.4 Distribution channels

The distribution of breakfast cereal takes place mostly through large-scale retail. The graph below provides a breakdown of the traditional distribution of cereal in Italy. Although the data isn't as recent, it can still provide an overview of the traditional distribution of breakfast cereal in the country. As we can see supermarkets, hypermarkets and discounts are about **% of the channels. Traditional stores are less and less relevant, mainly because of convenience reasons.

Breakdown of distribution by channels Italy, ****, in % Source: ****

It is necessary to underline that the new channel of e-commerce has become relevant in the last years, especially in the organic and bio sector of the industry. 

SINAB is the National Information System on Organic Agriculture set up by the Ministry of Agriculture, Food and Forestry in collaboration with the Italian regions. It has conducted a qualitative-quantitative survey, carried out by administering an online questionnaire to *,*** consumers, aimed at analyzing web sales of organic food products.The graph below shows the top * types of organic products purchased online. As we can notice, **% of the surveyed people purchased cereal and other breakfast products online in the past year.

Bio product purchased online Italy, ****, number of answers and % on the sample total Source: ...

4.1 Typologies of breakfast cereal

The different varieties of breakfast cereals can be divided into different sub-segments. First, there are the children's cereals, which are generally very sweet. [***]

Among the cereals for adults, there are those based on muesli, a mixture of oats and other ingredients such as dried fruit or seeds. These are stagnating in terms of sales (***), unlike Granola, a mixture of almonds, hazelnuts, walnuts, cashews, and possibly oats and honey, which have seen the strongest market growth in recent years. Finally, flakes are usually found in the adult cereal aisle, usually made from rice and wheat. [***]

Adding to this list of products are cereal bars, which can be made from a wide variety of ingredients, and usually contain palm oil, such as those made by Kellogg's Special K. In terms of ingredients, cornflakes are mostly made from corn, sugar, barley malt flavoring, salt, and glucose syrup. Hot cereals include products such as oatmeal, oatmeal and porridge, which are offered by Quaker, among others.

Main types of cereal in Italy

Flakes: A “flaking” process is used to make Corn Flakes: the grains are pressure cooked, generally with the addition of salt, sugar, and malt. They are then dried, cooled and pressed by rollers to ...

4.2 Price of production

The graph below gives an overview of the production prices in the past year, based on the Istat producer price index set in ****=***. 

As the data shows, producer's prices have remained quite stable during the lockdown months, in March, April, May, and June ****. However, the complications of the Covid-** pandemic and the economic crisis that derived from it, caused the industry to suffer from logistics complications, also in relation to exports and imports between European countries.

Because of this situation, the following months were sed by the companies to rearrange their operations and recover. Production prices did indeed increase from about *** in the lockdown months to *** in the same months of the following year.

Evolution of producer price index for cereals Italy, ****, index ****=*** Source: ****

4.3 New trends

All recent trends in the agro-food industry in the Western world are closely related to the increasing attention consumer have been giving to health-related issues.The sugar-tax, set to be put in place in **** in Italy, is also driving the free-from trend.

Consumption trends have shown how best-selling breakfast cereals for adults have three main characteristics in common.

Breakfast cereals  with health-boosting properties Free-from and no added / lower sugar cereals Energy & protein boasting cereals 

Brands have been adapting their product to the trend, by changing the composition of their cereal and shifting to healthier, energy boasting ingredients. Kellog's has launched its famous brand cereal CocoPops with **% less of sugar, and products labelled with the claim 'low sugar' accounted for *.*% of the sell-out and *.*% of the supply and, in one year, sales increased by *%. As for the claim 'no added sugar', this represents *.*% of the sell-out and *.*% of the supply.

The graph below shows the change in cereal nutrients in **** compared to the previous year. Nutrients that are positively perceived by the public, such as fibers have been increased up to ***%, while less healthy components such as sugar and sodium have been decreased respectively by -**% and -**%.

Evolution of breakfast cereal ...

4.4 Average price of breakfast cereals

The average prices for breakfast cereals are synthesized in the table below. The products chosen are the most loved ones by Italians in their categories according to Altro Consumo. 

5.1 Regulation

The Harmonised System is an international nomenclature for the classification of goods. It allows participating countries to classify traded goods on a common basis for customs purposes. At the international level, the Harmonised System (***) for the classification of goods is a six-digit code system. [***]

The HS consists of approximately *,*** item/product descriptions that appear as headings and subheadings, divided into ** chapters, grouped into ** sections. The six digits can be divided into three parts. The first two digits (***).

The Harmonised System was introduced in **** and has been adopted by most countries in the world. It has undergone several changes in product classification. These changes are called revisions and came into effect in ****, ****, ****, **** and ****. Detailed changes to each HS nomenclature are available on the links below.

For the compilation of the foreign trade and market calculation statistics for this study, the following fields were used:

External trade [***]

**** Prepared foods obtained by the swelling or roasting of cereals (***), pre-cooked or otherwise prepared.

Online Retail

The EU regulation has developed the following rules about online sales of organic products.

Retail shops that sell packaged organic products directly to the final consumer or user are exempted from obtaining the certification required by EC Reg. ***/****, when ...

5.2 Organic label and nutri-score

In order for a brand to obtain the organic label on one of its products, it must meet the following conditions:

At least **% of the product's components come from organic farming in accordance with EU regulations; The product complies with the rules of the official inspection system; The product comes directly from the producing farmer or food processor in a sealed package; The product bears the name of the producing farmer or food processor or distributor and the name or code of the inspection body.

In the European Union, the first regulation on organic farming came into force in **** (***). This overall score includes the assessment of positive parameters such as fibre, protein, fruit and nuts but also negative parameters such as kilocalories, saturated fatty acids, sugar and salt. While breakfast cereals are accused of containing elements that are too sweet for children, the signals sent by this score can be decisive in the act of buying.

6.1 Segmentation

• Kellogg’s
• Nestlé Italia
• Cameo
• Barilla
• Conad
• Carrefour Italia
• Coop
• Jordans
• Esselunga s.p.a
• Lameri
• Colfiorito
• Nestlé Groupe