Breakfast Cereal Manufacturing Industry Profile

The US breakfast cereals manufacturing industry includes about 30 companies with combined annual revenue of about $9 billion. Major companies include Kellogg, General Mills, Post (part of Ralcorp Holdings); and Quaker (owned by PepsiCo). The industry is highly concentrated: the top four companies account for 80 percent of revenue.

Breakfast cereal manufacturing includes companies that make ready-to-serve packaged cereal and cereals such as oatmeal and farina that must be cooked prior to eating. It doesn't include the manufacturing of granola bars, breakfast bars, or packaged cereal snacks.

COMPETITIVE LANDSCAPE

Demand is driven by demographics and health considerations, particularly the attitudes of busy families and working professionals toward the first meal of the day. The profitability of individual companies depends on managing raw material costs, operating efficiently, and maximizing retail shelf space. Large companies have advantages in purchasing, distribution, and marketing. Small operations can compete effectively by manufacturing cereals that emphasize organic or healthful ingredients. The industry is capital-intensive: average annual revenue per employee is about $600,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

The industry's major product is ready-to-eat (RTE) cereal, which represents 90 percent of total industry revenue. The most popular cereals are made with corn flakes, wheat, oats, mixed grains, or puffed rice. Other products include instant hot cereal, rolled oats, farina, and infant cereal.

To make breakfast cereal, grain is received, inspected, and cleaned at the cereal factory, then crushed by large metal rollers. Whole-grain cereals retain all ...