Oat-based Cereals Market Analysis

Oat-Based Cereals (Global, 2023)

Introduction

In the broader category of breakfast foods, the market for oat-based cereals has become a significant player, mainly because of the growing demand for healthier and more nutritious products. The fact that oats are rich in fibre and have a lowering effect on blood cholesterol has contributed to the growing awareness of their health benefits. The market for oat-based cereals is characterised by a wide range of products, including instant oats, granola and muesli, which cater to different dietary preferences and lifestyles. Oat-based cereals have also benefited from the increasing trend towards plant-based diets and clean label products, which are more in line with consumers’ desire for transparency and a sustainable food system. Competition is fierce, with both established and new players vying to gain market share through new formulations, flavours and packaging. Keeping abreast of consumers’ changing tastes, preferences and habits is therefore key for any player who wants to successfully navigate this dynamic market.

PESTLE Analysis

Political

In 2023 the market for oats and oat-based products is influenced by various political factors, among them government policies promoting healthy eating. In the United States, for example, the Department of Agriculture allocates some $ 1.5 billion to initiatives to increase the consumption of whole grain, which directly benefits the oat-based cereals sector. In addition, trade agreements, such as the NAFTA and the USMCA, have made the import and export of oat-based products easier, which has had a positive effect on the market.

Economic

In 2023 the economic situation of oats is characterized by an increase in the consumption of health-conscious foods. In the United States, an estimated expenditure of $12.3 billion was spent on breakfast cereals, with oat-based cereals gaining a growing share because of their health benefits. The price of food has risen by 4.2 percent, which has led consumers to seek less expensive but still nutritious foods.

Social

In 2023, the world will be undergoing a great change in dietary habits, and the number of consumers who are now seeking plant-based foods is estimated to be 39%. This is due to a greater awareness of health and the environment. The rise of social media stars who promote a healthy lifestyle has also brought about a noticeable increase in the popularity of oat-based foods, resulting in an increase in brand engagement and interest in these products.

Technological

In 2023, technological developments in food processing and packaging have had a major impact on the oat-cereal market. High-pressure treatment has improved the quality and shelf life of oat products. Companies have invested more than $200 million in new processing methods. Brands are also making better use of e-commerce, and the share of oat-cereals sold on the web has increased by 25 percent compared to the previous year.

Legal

In 2023 the oat-based cereals market is subject to various regulations on food safety and labeling. The Food and Drug Administration has established a guideline for health claims on the packaging of food, requiring that at least 51 % of the product must consist of whole grains in order to be eligible for health claims related to the heart. These regulations are of crucial importance to the producers because they can lead to fines and product recalls, which affect the brand and sales.

Environmental

In the oat-cereals market, especially as regards sustainable farming practices, the environment is increasingly becoming a major factor. In the year 2023, approximately thirty per cent of the oat-growers in the United States have adopted organic farming practices, in response to the growing commitment to the environment. Moreover, the carbon footprint of oats is estimated to be .5 kg of CO2 per kg of oats, which is considerably less than that of many other cereals, and thus oats are a more sustainable choice for consumers with an eye to the environment.

Porter's Five Forces

Threat of New Entrants

The market for oat-based cereals is characterized by moderate barriers to entry, which include the need for substantial investment in production facilities and distribution networks. However, the growing consumer demand for healthy and gluten-free food products has attracted new market players, which has made it easier for new entrants to enter the market. The established brands have a certain advantage in terms of brand loyalty and economies of scale.

Bargaining Power of Suppliers

The bargaining power of the suppliers in the cereal market is relatively low. Oats are widely available and are obtained from many suppliers, thereby reducing the dependence on a single supplier. Many manufacturers can easily change suppliers without any significant cost consequences, which reduces the bargaining power of the suppliers even further.

Bargaining Power of Buyers

The buyers of the oats market have great bargaining power, due to the abundance of products. Brands are easily exchanged by consumers, and the increasing health consciousness has led to a greater demand for good quality and new products. The pressure on retailers to reduce prices and improve product quality increases buyer power.

Threat of Substitutes

The threat of substitutes for cereals is moderate. Rice, corn and other cereals are numerous alternatives. But oats have unique health benefits and a unique nutritional profile that create a niche market. But the availability of various breakfasts can lure consumers away, so the threat is moderate.

Competitive Rivalry

Competition is high in the oat-based cereals market, with many established brands and new entrants vying for market share. Product development is continuous, with new products launched regularly, as companies compete to attract health-conscious consumers. This has resulted in a price war, which has led to the introduction of a new product. Competition is intense, which can affect the profits of the market.

SWOT Analysis

Strengths

• High nutritional value, rich in fiber and essential nutrients.
• Growing consumer preference for plant-based and gluten-free options.
• Strong brand loyalty among health-conscious consumers.
• Versatile product that can be marketed in various forms (instant, granola, etc.).

Weaknesses

• Higher production costs compared to traditional cereals.
• Limited consumer awareness in certain regions.
• Potential for cross-contamination with gluten-containing grains.
• Shorter shelf life compared to processed cereals.

Opportunities

• Increasing demand for healthy breakfast options and snacks.
• Expansion into emerging markets with rising health trends.
• Innovative product development, such as fortified or flavored oat cereals.
• Partnerships with health and wellness influencers for marketing.

Threats

• Intense competition from other healthy cereal brands and alternatives.
• Fluctuations in oat supply and pricing due to climate change.
• Changing consumer preferences towards other superfoods.
• Regulatory challenges regarding health claims and labeling.

Summary

In 2023, the Oat-Based Cereals Market is characterized by its strong nutritional benefits and the growing consumers’ focus on health and well-being. However, the higher production costs and the limited knowledge of consumers in some regions could limit the growth of the market. Opportunities lie in product innovation and expansion, while competition and supply issues could challenge the market’s stability. Oat-based cereals are a good choice for healthy food.