Posted by Mark J. Miller on June 27, 2012 11:04 AM
General Mills and Kellogg have been ruling the cold-cereal market for an eternity. Those two behemoths now own about 60 percent of a $9 billion U.S. market, but that doesn’t mean other companies aren’t finding some success cutting into their market.
One in particular, the 93-year-old MOM Brands Co., which was recently renamed from Malt-O-Meal, is producing such cereals as Tootie Fruities and Honey Nut Scooters, which bear more than a passing resemblance to Froot Loops and Honey Nut Cheerios.
"Once people try us, we have a very loyal group of consumers," commented MOM Brands CEO Chris Neugent to the Los Angeles Times. The company, originally named for the hot wheat product it solely put out for decades, has had its sales grow from $300 million in 2001 to $750 million in 2011.
The shift in its name came back in February when some of its “natural” lines of cereal were selling well and the company wanted to showcase that its own name-brand cereals were taking off and the private-label cereals that had once made up half of its sales had fallen to 20%.
Now, MOM is moving up on Post Holdings and PepsiCo’s Quaker division, according to the Times. “Its share of the U.S. cold cereal business as measured in pounds jumped from 3.1% in 2011 to 9.6% last year, fourth among major cereal makers and just a bit behind Post, according to Nielsen Co. data provided by MOM Brands,” the Times reports. Part of the draw is financial. MOM’s cereals are about 20% to 25% less per pound than its competitors. No surprise, MOM also doesn’t spend anywhere near as much as name-brand cereal marketers.
As MOM states in a customer FAQ section on its website: "Q: Why are your products lower in price than leading box brands? A: Ounce for ounce, Malt-O-Meal® ready-to-eat cereals cost less than the leading box brands. We are able to provide this everyday savings by limiting packaging and advertising costs and focusing on quality."
So Moms may save a buck or two on MOM's similar cereals — but at what cost to Kellogg, Post, PepsiCo and the bigger CPG companies?