The brand Cheerios is co-owned by Nestle and US company General Mills, but operates under Nestle for consumer recognition purposes in the UK. Consumers associate Nestle with high quality products and worldwide recognition. Cereal Partners is the UK manufacturer name with their aim being to provide “high quality, great tasting healthy products” (Nestle, 2012). Cereal Partners UK has established itself as the second largest manufacturer in the UK, with over 25% of a market that's worth more than £1.3 billion. (Cereal Partners UK, 2012). Cereal Partners UK makes breakfast cereals from raw ingredients which are grown naturally and are the source of many brands most noticeably brands such as shredded wheat, shreddies and for this analysis cheerios. The wheat used in cheerios and other products are sourced from farms across the UK providing “local employment opportunities”, and “premium quality products” (Cereal Partners UK, 2012). Cereal Partners believes in high standard of ethics with frequent charity donations as well as supporting and funding community products. By Nestle using Cereal Partners UK as their manufacturer, they are ensuring the premium quality and high stock that is associated with Nestle worldwide. Financial Performance:
Cheerios sits in a highly competitive but lucrative market. The breakfast cereals market has increased in value by 20% to £1,582 million between 2007 & 2012 and the market is predicted at current consumption/sales figures to increase by a further 19% in value to £1,883 in the next 5 years. In 2011 Cheerio’s had a 3% market share, the same percentage as rivals Kellogg’s shredded wheat. Weetabix and Kellogg’s Special K were the highest branded products with an 8% market share value each (Mintel, 2012) Product:
Cheerios has a variety of four products; Honey cheerios, Oat cheerios, Original cheerios and their newest product chocolate cheerios. It is also part of the Grab2Go Nestle product range which features multipacks of 5 individual bags aimed for the ease of consumers on the go, which can be stored in a working bag or lunchbox easily (Nestle, 2012). One of its weaknesses is its product range, with other competitors having advantage of a much larger variety. With the market expected to grow sustainably over the next 5 years, this could be a potential opportunity or a threat to cheerios, which will be analysed later on.
Cheerios have a set retail price of £2.29 for a 375 gram packet of Original, Honey and Oat cheerios. The new product of Chocolate cheerios is available at the same price but for a slightly smaller 330 gram packet, whilst GrabtoGo multipacks are available at £1.99 for a 125 gram bag. These products are all are available at high commercial supermarkets Tesco and Sainsbury, with the latter currently offering a price promotion of two packets of cheerios for £4. (Tesco and Sainsbury’s 2012) Consumer:
The cheerios ‘Original’ product was designed to target a wide range of consumers within the breakfast cereal market, providing a ‘healthy start to the day’ with nutritional and whole grain benefits (Nestle, 2011). The GrabtoGo product is designed for children in their lunch box as a healthy alternative to products like crisps or confectionary goods, or adults with limited time availability and therefore more convenience. New chocolate cheerios is an innovative product to modernise cheerios with other competitors who have created different flavour products/modernised such as weetabix with their chocolate and mini’s range (weetabix, 2012). Promotion:
Nestle has spent £8.8 million on advertising its breakfast products in 2011, a decrease of 67% since 2007 (Mintel, 2012). However under the cheerio brand it has pushed their ‘get set, go free’ marketing campaign, delivered by celebrity Tom Daley aimed at children between the ages of 6-16 which offers them a chance to try a range of sporting activities by collecting...