MORNING STARS

STEPHANIE FAGNANI

American consumers appear to be heeding the advice of mothers everywhere by not skipping the most important meal of the day. Eating breakfast seems to be back in fashion these days, but a lot has changed since the days of a leisurely morning full of bacon and eggs.

Retailers who spoke with SN report clashing shopping practices in their breakfast aisles, suggesting that the items chosen to jump-start one's morning vary with a certain amount of frequency.

At Ingles Markets, Asheville, N.C., the hot-cereal category is flat, according to Derik Jarvis, the account executive for Quaker, Tropicana and Gatorade, and the breakfast aisle manager.

Breakfast aisle sales at the retail level are down nationally, according to Dennis Dangerfield, vice president of grocery for the private-label cooperative Topco Associates, Skokie, Ill.

However, "there is one key category that is growing, and that is granola bars. It's a good lunch snack," Dangerfield said, adding that the category's perceived nutritional value may also play a part in its popularity.

Ingles also does a good job with breakfast bars, and this trend has continued for the past few years, Jarvis told SN.

"It's a variety- and new item-driven category. Retailers make good margins on them," he said, adding that Ingles continues to add space to that category. Jarvis reported that the retailer had a 12-foot section, with 72 linear feet in all. "They fill the niche for convenience, and they are perceived to be healthy."

Indeed, statistics from market research firm ACNielsen, Schaumburg, Ill., point to the popularity of the breakfast bar. For the 52 weeks ended Dec. 29, 2001, the total breakfast foods category grew sales in supermarkets by only 0.4% to $1.6 billion from the prior year. Of the subcategories under this umbrella, breakfast bars were the only products to witness a sales increase, that of 13.7% to $302 million. The others -- toaster pastries, both shelf-stable and frozen, granola and yogurt bars, and powdered instant breakfast -- all saw sales decline.

The total cereal category took in $7.3 billion, a 1.1% decrease from the prior year. Of its subcategories -- which include ready-to-eat cereal, hot cereal, granola and natural cereals, hominy grits and wheat germ -- hot cereals showed the most substantial sales dollar gain, that of 7.1% to $834 million in sales. Following on its heels, granola and natural cereals showed a sales increase of 5.2% to $141 million, while ready-to-eat cereal sales dropped 2.3% to $6.2 billion, according to ACNielsen.

Customers are taking advantage of both types of items -- traditional breakfast items and convenience items -- at Lund Food Holdings, Edina, Minn. "For example, families may, during the week, seek the more convenient items, such as breakfast bars, while on the weekends when they have more time, they may select a more traditional breakfast menu," said Steve Sorenson, category manager of grocery.

As with most grocery categories, the frequency of promotions can have a great influence on what goes into shoppers' baskets.

Quaker promotes hot cereal twice a year: during the back-to-school period and right after the first of the year, when students are returning from holiday breaks, Jarvis said. "This leaves us vulnerable for the other 50 weeks of the year. I think the economy has something to do with it. I think some of the baseline business is going to Wal-Mart and some of your deeper discounters," he added.

Also, sources told SN that in the interim of vendor promotions, store brands have successfully swayed shoppers.

Private-label items, Jarvis said, are stealing the show at Ingles -- capturing sales in the breakfast category to the detriment of his company's brands.

"There is a big emphasis nationally and at Ingles on private-label growth," Jarvis said. "I understand it, from a profit-margin perspective, and it's having a big impact on sales in the category."

Ingles has pushed its store brands further into the morning light by devising a new planogram in the third quarter of 2001, which went from a blocked set to one that is segmented, he said, noting that Quaker sales dropped 20% since the new reset.

At Topco, the Shurfine label of products was recently put through a package redesign, its first since 1978. Since then, "those items are seeing a significant improvement in sales, across the entire line," Dangerfield said.

In terms of the cereal redesign, the company chose a common theme -- that of blue children engaging in activities such as skateboarding and riding tricycles -- on its packages, because "the children will influence the buying decision of the parents," Dangerfield said.

"From a private-label perspective, it really helps tie up that aisle. It's been pretty price-competitive lately," he said, "and private label has helped bring the aisle back down to a more affordable level."

While Lund Food Holdings doesn't offer private-label items in the breakfast segment, the retailer engages in sampling activities to capture the attention of early birds.

"Demoing is a great selling tactic for us," said Sorenson. "We even experiment in the early hours of the day with breakfast-style demos that may cross merchandise with other products. For example, we could have a brunch theme that ran from 10 a.m. to noon where people could sample a new mesquite seasoning demoed with eggs," he said.

Other tactics include a lot of cross merchandising coming from the vendor community with breakfast items, such as breakfast bars, as well as regular and hot cereals. One example employed by Lund is merchandising soy milk with the natural cereals, Sorenson added.