Quaker bets $66M on breakfast bars

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Quaker Foods & Beverages plans to spend an unprecedented $66 million against its more wholesome and convenient breakfast offerings this summer in a bid to take on fast-growing competition from General Mills and Kellogg Co.

The extensive outlay is a response to the double-digit growth in the overall snack and granola bar categories, and the whopping 40% rise in sales of General Mills' Nature Valley granola bars, which can be attributed largely to the growing consumer demand for healthy products.

According to sales materials, Quaker's plans call for a $26 million push against its Fruit & Oatmeal lineup, which includes support for the June launch of new Quaker On the Go Bars. In addition, the PepsiCo division will levy a $40 million barrage to tout its Oatmeal Breakfast Squares' new placement in grocery stores' hot oatmeal sections.

Although Quaker's largest equity in the bars category is its Chewy Granola brand, that lineup has until recently been focused more on indulgence , with varieties that include candy and cookie bits. Quaker last year introduced a line of low-fat Chewy Wholesome Favorites to compete against brands positioned as healthier.

print and tv

The Fruit & Oatmeal banner, which includes Bars, Bites, Toastables toaster pastries and new On the Go bars billed as "oatmeal to go," will get print and TV beginning in June from Omnicom Group's Element 79, Chicago. Oatmeal Breakfast Squares will get extensive TV beginning Aug. 3 as well as print, outdoor and in-store events, also from Element 79. Taylor Nelson Sofres' CMR reports Quaker spent $9 million on Fruit & Oatmeal Bites and less than $1 million on Oatmeal Breakfast Squares last year.

According to UBS Warburg analyst Caroline Levy, PepsiCo executives "believe the consumer is moving toward healthier products, and they want to portray an image of themselves as a company providing a full array of products from indulgent to healthy."

Rumors abound that PepsiCo will divest brands from among the Quaker portfolio when it reaches the two-year anniversary of the Quaker acquisition in August, but Ms. Levy believes the Quaker brand will remain to offer the company its much-needed association with health.

Protecting ground

Meanwhile, General Mills prepares for the onslaught of competition from Quaker and others with plans to increase media spending beyond the $4 million CMR said it spent last year on Nature Valley. The turnaround of one of the original granola bar brands from its decade-long decline-during the mid-80s to mid-90s-is a result of a reformulation and repositioning of the brand, according to Nature Valley marketing manager Chris Brandt. "The energy bar nature intended" positioning began roughly five years ago, mostly through guerrilla tactics, said Mr. Brandt.

A print effort from Interpublic Group of Cos.' Campbell Mithun, Minneapolis, and extensive sampling, especially through partnerships with such organizations as the Nature Conservancy and the U.S. Ski & Snowboarding Team have pushed the brand so far.

But as it continues to grow, Mr. Brandt said, General Mills will likely leverage those efforts with higher levels of mainstream media. "We'd be foolish not to," he said, adding that TV is a possibility for the brand. Nature Valley has extended beyond its original crunch bar to include its own Chewy granola bars as well as yogurt bars (the latest trend), offerings that have fostered incremental sales instead of cannibalizing the base business as many other new bar entries have done for its competition, he said.

cereal options

General Mills has also been quite successful with its Milk `n Cereal bars and has plans to launch a new cereal bar line dubbed Oatmeal Crisp Fruit `n Cereal Bars based on its Oatmeal Crisp cereal in May.

Meanwhile, Kellogg is busy building an armada of granola and cereal bars on which it plans to spend heavily (AA, Feb. 17), among them new Cereal & Milk Bars, Nutri-Grain Muffin Bars and Special K Bars. Kellogg spent $11 million in media on Nutri-Grain last year, according to CMR. Bcom3 Group's Leo Burnett USA, Chicago, handles.

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