Ready-to-Eat Breakfast

1105 Words5 Pages
R-T-E Cereal Breakfast Industry

Name: Andres Gil
Competitive Analysis and Strategy

The ready to eat (RTE) cereal industry has grown steadily, with a compounded annual volume rate of three percent between 1950 and 1993. It success during the 20th century had been driven by the surge of consumer’s interest in healthy and dietary food. After World War II there was an increase demand for vitamin fortification products. During the 50’s, pre-sweetening gained popularity among Americans and in the 70’s and through the 80’s consumer’s preferences turned to granola and natural cereals. Ready-to-eat breakfast cereals have become the best option for a healthy and nutritional breakfast mainly due to the market’s perception that
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The more new entrants that enter the market, the more saturated and fragmented it becomes for everyone. Brand name recognition plays a role in the RTE cereal industry. A company with a strong brand name such as Kellogg can sometimes retain a customer even if its prices are higher than competitors.
Power of suppliers:
There are many suppliers in this industry due to the simplicity of the materials, basic food ingredients, needed to manufacture these products. Subsequently, supplier’s cost remains relatively low compared to other industries.
Power of buyers:
Given the number of products available, the bargaining power of customers in this industry is very high. The two main drivers for customer’s preferences are quality and price, there is no service involved.
Threat of substitutes:
This category is very high in the RTE cereal industry. RTE cereals compete with every single breakfast buyer option that is out in the market. For instance, a person might choose to eat an egg sandwich or fruits or pancakes rather than cereals. Through high advertising costs, RTE cereal companies create brand awareness among consumers by presenting their products as the healthier breakfast option and therefore remain competitive.
Competitive rivalry:
This industry had been heavily concentrated by the big three companies during the last 90
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