Cheerios is an example of a generic name in the cereal market.

The cereals market in China continues to see growth. According to TMR research, Asia-Pacific is – compared to the declining demand in Europe and North America – expected to amount for a market share of around 13% of the overall market by the end of 2019. The increasing popularity of lighter meals and Western breakfast habits are the primary drivers of this emerging trend.

Major players, including Cereal Partners Worldwide, General Mills, Kellogg, and PepsiCo, have all targeted the market in some way. The breakfast cereals market benefited both from the increase of hectic lifestyles and rising health awareness among consumers. An increasing number of young Chinese consumers are opting for healthy and lighter breakfast cereals as a convenient and healthy morning meal, enabling them to save more time when devouring breakfast on busy mornings. Most breakfast cereals contain vitamins and have a high quantity of fiber. Thus, breakfast cereals are increasingly popular alternatives to traditional breakfast choices which are hot and savory, such as rice porridge, noodles, baozi (steamed buns) and other baked goods. Breakfast cereals are predicted to see 6% value CAGR at the current 2016 prices. Multinationals will continue to center their strategy on well-tailored consumer targeting by offering products to meet the different demands of a niche market. For example, to provide the needs of older adults, manufacturers will take their inspiration from traditional Chinese medication by offering products containing Chinese ingredients such as red dates, goji berries, and black sesame. Sugar-free products are also a huge rising trend regarding the focus on consumers’ changing eating habits, focusing more on healthy and nutritious food. Manufacturers will meanwhile emphasize high calcium and vitamin contents for the Chinese children’s breakfast, encouraging parents to opt for functional and healthy products. Breakfast cereal market players are responding to the health and wellness trend and are keen to add innovative and healthier ingredients to gain shares.

Essential to know about the cereals market in China

The performance of the breakfast cereal market is forecast to decelerate, with a CAGR of 6.2% for the five-year period between 2012-2017, which is expected to drive the market to a value of $182.8m by the end of 2017. However, the Chinese cereals market grew with enough healthy annual growth rates over the last years and is continuously increasing. In 2015 the revenue of general cereal sales amounted to RMB 2.805 billion ($407 million), whereas in 2022 the market is expected to more than double, reaching RMB 6.2 billion ($855.8 million), according to the Chinese company Zhiyan Consulting (智研咨询). The exploding population – especially China’s middle class– will significantly contribute to the increasing demand.

Compared to the Western world, the current cereal market size is still small in China. Thus, there is great potential for penetration. Fan Dejin (飯的金), working at Daxue Consulting declares, “People around me seldom eat cereal for breakfast. But they may try them for curiosity or to lose weight such as some cereal with dried fruit or nuts in it. But I know that some elderly eat cereals for breakfast.”

Supermarkets and hypermarkets form the leading distribution channel in the Chinese breakfast cereals market, accounting for a 53.1% share of the total market’s value. Some other independent retailers account for 27.5% of the market. However, the fast-emerging e-

commerce which enhances cross-border purchases made the category available to a broader clientele.

The breakfast cereals market consists of the sale of hot cereals and ready-to-eat (RTE) cereals. RTE cereals in milk are enjoying an increasing popularity, especially in first- and second-tier cities, according to Euromonitor. The ready-to-eat cereals segment was the market’s most lucrative in 2012, with total revenues of $80.2m, equivalent to 59.2% of the market’s overall value. The hot cereals segment contributed revenues of $55.3m in 2012, equating to 40.8% of the market’s aggregate value. However, by having a look at the sales on Taobao, speculations may occur, as hot cereals are still dominating the market and much more preferred among the Chinese customers.

The domestic Guilin Sea Mild Biology Technology Development led breakfast cereals and accounted for a value share of almost 20% last year, in 2014. Unlike most other leading players, Guilin Sea Mild specializes in hot cereals, with its overall leadership mainly thanks to its well-established brands and strong distribution network. Guilin Sea Mild is also positioned as mid-priced and thus benefits from a broad potential customer base. The company mainly targets elderly consumers with strong products such as Seamild Nutrition Cereal for the Elderly, High Iron Red Dates Cereal, and High Calcium Walnut Cereal. The company gained almost half a percentage point value share in 2014 over the previous year thanks to their reasonable selling price strategy and their strong reputation for quality.

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