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Breakfast Cereal Manufacturing Industry Profile Excerpt
| SIC Codes: 2043 NAICS Codes: 31123 Page Length: 10-12 Last Quarterly Update: 11/3/2008 View Sample Industry Profile |
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The breakfast cereals manufacturing industry includes about 50 companies with combined annual revenue of $9 billion. Major companies include Kellogg; General Mills; Post (part of Ralcorp Holdings); and PepsiCo's Quaker Food and Beverage subsidiary. The industry is highly concentrated: the top four companies account for 80 percent of industry revenue.
Breakfast cereal manufacturing includes companies that make ready-to-serve packaged cereal and cereals like oatmeal and farina that must be cooked prior to eating. It doesn't include the manufacturing of granola bars, breakfast bars, or packaged cereal snacks.
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 industry is capital-intensive: average annual revenue per employee is $600,000.
Breakfast cereals compete against other popular breakfast items prepared at home, including eggs, yogurt, bacon, donuts, muffins, toaster pastries, bread, coffee, and fruit. Breakfast cereals also compete with restaurants and food kiosks that sell breakfast food items. Cereal also competes against the trend to skip breakfast entirely.
PRODUCTS, OPERATIONS & TECHNOLOGY
The industry's major product is ready-to-eat (RTE) cereal, which represents 90 percent of total industry revenue. The most popular cereals are made with corn ...
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