REDUCED-SUGAR ITEMS READY FOR STORES 2004-04-26 (1)

JON SPRINGER

NEW YORK -- Reduced-sugar kids' breakfast cereals and a "mid-calorie" cola announced last week by Kellogg's and Coca-Cola, respectively, promise better nutritional offerings for Center Store, a supermarket dietician told SN.

"It's a step in the right direction, particularly for Kellogg's," said Marnie Sherno, corporate dietician, Clemens Markets, Kulpsville, Pa.

The new products join a wave of healthier alternatives to traditional food products. These range from reduced-carbohydrate corn chips to "Adult Happy Meals" containing a salad and bottled water from McDonald's. They mark manufacturers' continuing efforts to cater to consumers who are increasingly concerned about their health and weight.

Kellogg's, which is based in Battle Creek, Mich., said it would release brand extensions of Frosted Flakes and Froot Loops cereals that would contain one-third less sugar than their standard counterparts. The varieties include no artificial sweeteners.

"I'm glad to see they are not adding artificial sweeteners," Sherno said. "I think consumers would certainly go for cereals with reduced sugar, especially since artificial sweeteners are not replacing the sweetness of the sugar. These cereals are mainly marketed to kids. I think most consumers who have kids would like to see their kids eat less sugar."

Kellogg's said in a statement that the brand extensions demonstrate "significant category innovation." Earlier this year, the company released a reduced-sugar version of its Hunny B's cereal. The new cereals are available in 17.5-ounce and 13.3-ounce boxes, and have suggested retail prices of $3.69 and $3.39, respectively.

The new products may give the cold-cereal category a much-needed boost. According to Chicago-based Information Resources Inc., unit sales of cereal were down by 2.9%, and dollar sales fell by 1.3% in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart during 2003. Frosted Flakes is Kellogg's best-selling cereal brand, but its unit sales fell by 2.7% last year, based on figures from IRI.

Coca-Cola, Atlanta, said its "mid-calorie" cola, C2, would launch in U.S. stores this summer after an introduction in Japan. C2 will have half the sugar, calories and carbohydrates of regular colas. Last month, Purchase, N.Y.-based PepsiCo said it would introduce mid-calorie Pepsi Edge, expected to be available in August.

Mid-calorie colas "are catering to a certain niche, and were probably inspired by the low-carb movement of the times," Sherno said. "Ideally, people would switch to another nutritious beverage like water or 100% juice. But for those consumers who won't make that switch, it would be a better option."

Manufacturers hope the mid-calorie colas will attract new cola drinkers, and satisfy users who switch between regular and diet brands. Pepsi estimated there are around 60 million people who regularly consume both diet and regular colas.

Sherno said she felt the taste of mid-calorie soda would be the ultimate test. Pepsi Edge is sweetened with Splenda and high-fructose corn syrup, while Coke's C2 contains those two sweeteners, plus aspartame and acesulfam K.

"Taste is still the No. 1 reason consumers choose things," said Sherno. Success for mid-calorie sodas, she added "will be based on taste exclusively."

Coca-Cola will support the summer rollout of the C2 brand with television, radio and Internet advertising. The product will be available in bottles, cans, at fountains, and as a frozen carbonated beverage.