Tainted milk hurt cereal growth opportunities – Paul French

Kellog is the second cereal maker, after Weetabix, trying to enter the China market. But ongoing milk scandals have made the market a hard one to crack, tells retail analyst Paul French to AP. Nevertheless, Kellog sees possibilities for growth.

AP:

China’s past scandals with tainted milk nevertheless remain a major stumbling block for cereal makers, says Paul French, chief China market strategist for Mintel, a research firm.

“They’ve been having a go at trying to get them to eat (cereal) for some time,” he said.

Another hurdle is that milk in China doesn’t taste the same as in the U.S. because it tends to be watered down and filled with additives, French said.

When middle-class Chinese consumers do eat cereal, French said they typically opt for muesli-like brands rather than cornflakes, because they tend to contain dried fruit and are more akin to local products. He noted that the Chinese food maker Bright Foods earlier this year acquired a majority stake in Weetabix, which makes Alpen muesli.

French said cereal companies are finding greater success selling breakfast bars, which don’t require milk and can be marketed as energy boosters for white-collar workers.

Also Pringles, Kellog’s effort to go beyond the breakfast, is not doing well in China.

Although Pringles already has a broad presence in China, Frito-Lay has been much more aggressive in offering flavors that appeal to the Chinese, said the Mintel analyst, French. Those include seafood flavors popular in various regions, as well as foreign flavors such as “Italian Ham” and “Texas Steak” that the Chinese might find exotic, French said.