In the minds of health-conscious consumers, a hot-cereal cup provides the best of both worlds: a grab-and-go breakfast of good-for-you oats or wheat, fruit and natural flavorings.
Dr. McDougall's Right Foods, based in San Francisco, markets two hot-cereal cups: Oatmeal and Wheat with Real Apples and Cinnamon and Oatmeal and Four Grains with Real Maple Sugar. The company has seen a 25% increase in sales in the cups each year for the past three years it has been in business.
Jim Ahrens, president and co-founder of McDougall's along with Dr. John McDougall, said it is impossible to determine how much of the increase is due to popularity of the convenient cups and how much is natural growth of the new company. McDougall's, which markets its line in health-food stores as well as supermarkets and does its own mail-order business, has no plans for adding new flavors.
Fantastic Foods, Petaluma, Calif., introduced hot-cereal cups in its natural-food line in the summer of 1995 and found them to be the most successful product introduction in its history. The company now markets six flavors, all containing oats, with the newest, Hearty Grains with Apricots, introduced a year ago. Sales have increased 4% from last year, according to Bonnie Tawse of The Fresh Ideas Group, which handles public relations for the food company.
Health Valley, a natural-food manufacturer based in Irwindale, Calif., came out with four flavors of hot-cereal cups a year ago and sales have exceeded expectations, growing at about 20% a month, according to Russell Matsuda, director of marketing.
Each of the four flavors -- Maple Madness, Banana Gone Nuts, Terrific 10 Grain and Amazing Apple -- have a mix of grains, including oatmeal, and are distributed through supermarkets and natural-food stores. The line is doing so well that the company is considering adding flavors, Matsuda said.
Some supermarkets, like Safeway, Pleasanton, Calif., are marketing their own private-label brand of hot cereal. But the biggest cereal producers, like Quaker Oats, Chicago, make hot-cereal cups but do not distribute them to supermarkets. Instead, Quaker distributes hot-cereal cups to vending-machine companies, college cafeterias and hotel and motel chains. The company also sells to distributors who make them available to convenience store owners, said Karen Savinski, Quaker spokeswoman.
"The big companies already have their share of shelf space in supermarkets," said Robert M. McMath, president of New Products Showcase & Learning Center in Ithaca, N.Y. "Bigger companies have a harder time in the niche markets."