While oatmeal and other hot cereals continue to be strong in the breakfast category, retailers say that the sales lift these items received two years ago, after manufacturers added health claims to packaging, has leveled off.
This is the second winter since the Food and Drug Administration ruled, in January 1997, that some food products containing oatmeal can include a health claim on the package. Under the FDA guidelines, manufacturers of any whole-oat product with at least 0.75 grams of soluble fiber per serving can put a claim on the package saying, "Diets low in saturated fat and cholesterol that include soluble fiber from oatmeal may reduce the risk of heart disease." Previously, the American Heart Association had similarly endorsed oats, saying they help meet the association's guidelines for a healthy diet.
The combined one-two punch to a nation of consumers eager for products that look healthy had the immediate effect of boosting sales of oatmeal and other hot cereals. Although most of the gains in the category have been retained, the initial jump in sales has tapered off, retailers say, and most have no plans to push hot cereal beyond its current, steady volume.
Prior to the FDA announcement, the retail sale of oatmeal and other hot cereals in supermakets had been declining between 2% and 4% a year, according to ACNielsen, Schaumburg, Ill. After the announcement, which pushed the sale of oats up on the commodities market, retail sales of hot cereals went from $670 million annually for the year ended September 1996 to $695 million a year for the next 52-week period. These sales were up 3.7% from the previous year.
Hot-cereal sales leveled off at $713 million in all channels for the 52-week period ended September 1998, according to ACNielsen. In the supermarket channel, sales were $680 million for the 52-week period ended September 1998, down 2.2% from the previous year.
But any claims a food product can make about promoting healthy living can help sales, said Pat Redmond, grocery buyer for Rosauers Supermarkets, Spokane, Wash., which has stores in Washington, Oregon, Idaho and Montana.
"Everybody is on a health kick," Redmond said. "It has become a way of life for an awful lot of people. Our sale of Quaker Oats went up 25% when the FDA announcement first came out." The store expanded its hot-cereal display by about 20%, ran newspaper advertisements and reduced prices.
"Any time we get a chance to shout something, we do it," the buyer added. Now sales have leveled off, although increases of a little less than 5% were seen last year and the expanded shelf space has been retained. The only innovations expected in cereals this year are in the cold-cereal category, where even more new health-conscious varieties are anticipated, he said.
Stop & Shop stores in Connecticut, Rhode Island, New York and Massachusetts also will stick to a conventional advertising schedule, which should maintain, but not change, the steady sales pattern for hot cereals that has been experienced in the last year, according to a public relations representative who did not wish to be identified. Stop & Shop is headquartered in Quincy, Mass.
On the other side of the country, Scolari's Food & Drug, based in Sparks, Nev., echoed the East Coast experience.
"Hot cereals always get some increase this time of year, because cold weather makes people think of it. We get a 10% to 15% increase in winter. Some stores saw a 2% to 3% overall increase in sales when the health claims were put on," said Charles Jones, senior buyer.
Scolari's, which has units in Nevada and California, sells Hy-Top private-label hot cereal along with national brands. Scolari's will do newspaper and in-store advertising at the end of January to keep the interest of those who switched to hot cereal at the beginning of winter. The product will remain displayed with the cold cereals, said both Jones and Redmond of Rosauers. Redmond noted that sales slip by as much as two-thirds when hot cereals are moved to the health-food section of the supermarket.
Hot cereals may have lost a little bit of advantage after cold cereals also began to be promoted with FDA and American Heart Association endorsements, noted Kevin Dale, buyer for H.G. Hill, Nashville, Tenn. Sales have leveled in the last year, he said, with bagged cereals -- both hot and cold -- remaining the most popular because they are less expensive, he said.
Most manufacturer promotions are for cold cereals, according to Louis A. Amen, chairman of Super A. Foods, which has 12 stores in the Los Angeles area. His stores are not planning any special promotions, he said.
"Sales [of hot cereals] peaked about a year ago and now it is going down hill," said Iris Robinson, a spokeswoman for Brookshire Grocery Co., Tyler, Texas, which has 130 stores in Texas, Louisiana and Arkansas.
The company's private label, also Hy-Top, has been doing the best, followed by Quaker instant oatmeal. Hy-Top will be coming out with some new oatmeal flavors, and any special advertising will be aimed at the children's market. Otherwise, the normal three-times-a-winter promotional schedule, which started with a back-to-school push, will be maintained, Robinson said.
