Market Review
The current cereal supply market is dominated by Kellogg’s and Nestle providing a wide range of product flavors and portions while dominating the biggest shelf share in retail and wholesale outlets. There are other smaller players such as Weetabix, Country Farm, General Mills, and Heaven Birds but they lack the shelf presence and variety in many outlets. The analysis divided competing supply in the market based on product composition which constitutes of cereal with chocolate filling and/or filling. Direct competition to the proposed product has been introduced recently into the market by Kellogg’s with its Trésor brand which comes in two different flavors; milk chocolate and chocolate hazelnut. Indirect competition has been also considered in the analysis by covering chocolate cereal of all other shapes such rice toasted chocolate cereal, shells chocolate cereal, and coco pops.
Market Segmentation
Supply Segmentation
The study covered 16 outlets in the different areas of Kuwait. The variety of outlets selected covered different consumer characteristics vs. the available selection of products and prices in their areas. The areas covered are:
Area | Governorate |
Shuwaikh | Asimah |
Al Rawda | Hawally |
Salmiya | Hawally |
Mishrif | Hawally |
Jabriya | Hawally |
Qurain | Mubrak Al Kabeer |
Addan | Mubarak Al Kabeer |
Abu Fateera | Mubarak Al Kabeer |
Hadiya | Ahmadi |
Al Rai | Jahra |
Table 1 Exhibits the areas covered in the analysis
Private supply outlets such as Sultan Center, Lulu Hypermarket, and Géant offer wider range of chocolate cereal products than government owned cooperatives. Table 2 exhibits the diversity of competition in chocolate cereal flavors, shapes, and weights in private and public outlets.
Brand |
Private |
Public |
Carrefour |
3 |
– |
Cepro’s |
3 |
2 |
Country Farm |
1 |
6 |
Diamond |
9 |
– |
General Mills |
3 |
– |
Heaven Birds |
– |
4 |
Kellogg’s |
47 |
30 |
Mornflake |
1 |
– |
Mr. Kanny |
1 |
2 |
Nestle |
39 |
27 |
Poppins |
4 |
6 |
Sultan |
5 |
|
SweeToon |
3 |
|
Weetabix |
6 |
1 |
Table 2 total number of chocolate cereal variations by type of outlet
Table 2 indicates that there is demand generated by expatriates for diversified chocolate cereal products in private outlets than cooperatives. The higher selection of products in the private supermarkets indicates that there is a better chance for consumers to test new products than other locations. Additionally, newly introduced products in the market have a better chance to be recognized in the private supermarkets than in cooperative due the bigger consumer portfolio.
Competition
Direct Competitors
Direct product competition to the chocolate cereal products with chocolate filling has the following product characteristics:
- Products that weigh between 300-399 grams
- Cereal with filling
Product Name | Private | Coops |
Kellogg’s | KWD 1.450 | KWD 1.590 |
Coco Pops Rocks | KWD 1.450 | KWD 1.750 |
Krave | KWD 1.850 | |
Tresor Blue | KWD 1.590 | KWD 1.590 |
Tresor Red | KWD 1.690 | KWD 1.590 |
Mornflake | KWD 1.100 | |
Chocolaty Squares | KWD 1.100 |
Table 3 direct competition minimum price comparison in private supermarkets and cooperatives
Product Name | Private | Coops |
Kellogg’s | KWD 2.050 | KWD1.760 |
Coco Pops Rocks | KWD 1.790 | KWD 1.750 |
Krave | KWD 2.050 | |
Tresor Blue | KWD 1.590 | KWD 1.590 |
Tresor Red | KWD 1.860 | KWD 1.760 |
Mornflake | KWD 1.100 | |
Chocolaty Squares | KWD 1.100 |
Table 4 direct competition maximum price comparison in private supermarkets and cooperatives
Product Name | Private | Public |
Kellogg’s | KWD 1.734 | KWD 1.684 |
Coco Pops Rocks | KWD1.686 | KWD1.750 |
Krave | KWD1.983 | |
Tresor Blue | KWD1.590 | KWD1.590 |
Tresor Red | KWD1.759 | KWD1.726 |
Mornflake | KWD 1.100 | |
Chocolaty Squares | KWD1.100 |
Table 5 direct competition average price comparison in private supermarkets and cooperatives
It is clear that companies have different strategies when it comes to pricing their products in private supermarkets vs. cooperatives. For example, KRAVE by Kellogg’s is imported and priced by Sultan Center but the product in Sultan Center Jabriya is sold 200 Fils less than Sultan Center Salmiya. Additionally, some Kellogg’s product lines are sold cheaper in coops than in private supermarkets.
Indirect Competitors
Indirect product competition to the proposed product includes:
- Products that weigh between 300-399 grams
- Any chocolate cereal products
Brand | Origin | Av. Price |
Country Farm | FranceGermany | KWD 0.865KWD 0.890 |
General Mills | USA | KWD 1.800 |
Heaven Birds | Egypt | KWD 1.130 |
Kellogg’s | GermanySpainUK
USA |
KWD 1.744KWD 1.502KWD 1.850
KWD 2.050 |
Mornflake | UK | KWD 1.100 |
Mr. Kanny | Italy | KWD 0.980 |
Nestle | FranceTurkey | KWD 1.243KWD 1.189 |
Poppins | Lebanon | KWD 0.922 |
Sultan | Egypt | KWD 0.692 |
SweeToon | Lebanon | KWD 1.280 |
Weetabix | UK | KWD 1.314 |
Table 6 price comparison of indirect competitors based on brand and country of origin
It is clear that brand name is the key benchmark factor for pricing chocolate cereal product in the market but not country of origin. Mr. Kanny and Country Farm products are EU products but priced at lower category than popular brands such as Kellogg’s and Nestle.
Both Kellog’s and Nestle dominate the cereal shelf space in the private supermarkets and cooperatives with wider range of cereal flavors, shapes, and weights.
Product name | Private | Public |
Country Farm | KWD0.990 | KWD0.865 |
Choco Flakes | KWD0.865 | |
Choco Shells | KWD0.990 | KWD0.865 |
Choco Snaps | KWD0.865 | |
General Mills | KWD1.800 | |
Cocoa Puffs | KWD1.500 | |
Reese’s Puffs | KWD2.100 | |
Heaven Birds | KWD1.130 | |
Choco Pops | KWD1.130 | |
Kellogg’s | KWD1.427 | KWD1.382 |
Coco Pops | KWD1.349 | KWD1.364 |
Coco Pops Chocos | KWD1.265 | KWD1.135 |
Coco Pops Jumbos | KWD1.708 | KWD1.650 |
Mr. Kanny | KWD1.200 | KWD0.870 |
Choco Crunch | KWD1.200 | |
Choco Smile | KWD0.870 | |
Choko Goal | KWD0.870 | |
Nestle | KWD1.216 | KWD1.225 |
Chocapic | KWD1.178 | KWD 1.188 |
Crunch | KWD 1.298 | KWD 1.300 |
Nesquick | KWD 1.176 | KWD 1.210 |
Nesquick Duo | KWD 1.192 | KWD 1.183 |
Poppins | KWD 0.965 | KWD 0.893 |
Choco Bits | KWD 0.975 | KWD 0.880 |
Choco Bumps | KWD 0.975 | KWD 0.935 |
Choco Flakes | KWD 0.935 | KWD 0.935 |
Choco Pops | KWD 0.975 | KWD 0.865 |
Sultan | KWD 0.692 | |
Choco Flakes | KWD 0.693 | |
Choco Pops | KWD 0.690 | |
SweeToon | KWD 1.280 | |
Fulla Chocolate | KWD 1.200 | |
Choco Cereal | KWD 1.320 | |
Weetabix | KWD 1.304 | KWD 1.375 |
Disney Cars | KWD 1.270 | |
Weetos | KWD 1.321 | KWD 1.375 |
Table 7 indirect competitors’ prices in private vs. public outlets
Product Positioning Scheme
Based on the market review findings which can be summarized as follows:
- There is no correlation in price between chocolate cereal product sold in private super markets and in cooperatives.
- Product brand is the key factor in pricing chocolate cereal products rather than the manufacturing origin
- Competition offer wide range of chocolate cereal products in shape, origin, weight, and price.
- The average price of a direct competing product in private supermarkets is KWD 1.700 and KWD 1.685 in cooperatives
- The average price of an indirect competing product in private supermarkets is KWD 1.245 and KWD 1.180 in cooperatives
Product Name |
Private |
Coops |
||
Minimum Price | Maximum Price | Minimum Price | Maximum Price | |
Mornflake | KWD 1.100 | KWD 1.100 | ||
Chocolaty Squares | KWD 1.100 | KWD 1.100 | ||
Kellogg’s | KWD 1.450 | KWD 2.050 | KWD 1.590 | KWD1.760 |
Coco Pops Rocks | KWD 1.450 | KWD 1.790 | KWD 1.750 | KWD 1.750 |
Tresor Blue | KWD 1.590 | KWD 1.590 | KWD 1.590 | KWD 1.590 |
Tresor Red | KWD 1.690 | KWD 1.860 | KWD 1.590 | KWD 1.760 |
Chocolate Cereal with filling | KWD 1.690 | KWD 1.690 | KWD 1.690 | KWD 1.690 |
Krave | KWD 1.850 | KWD 2.050 |
Recommended Pricing Scheme
It is worth to note that selling above average retail selling prices is not recommended to newly launched products and brands. Price sensitivity is the dominate consumer attitude in Kuwait. Consumers weigh prices over quality. This is witnessed in the market survey where high quality products from Europe but limited consumer awareness of the brands forced the companies to sell them at lower than average market prices for the chocolate cereal category.
We recommend phasing out the product launch into the following phases:
Phase 1
Unit Cost | KWD 0.918 |
Unit Price to Outlets | KWD 1.273 |
Unit Price to Consumer | KWD 1.400 |
Profit Margin | KWD 39% |
Phase Duration | 6 months |
Phase 2
Unit Cost | KWD 0.918 |
Unit Price to Outlets | KWD 1.536 |
Unit Price to Consumer | KWD 1.690 |
Profit Margin | KWD 67% |
Launching the product at below average the market price while marketing the product as high quality Swiss product would attract both the price and quality sensitive consumers.
It is important that approvals for the pricing scheme is obtained based on the phase 2 prices to avoid battling a price increase approval from the Union of Consumer Cooperative Societies (UCCS).
Definitions
- UCCS is Union of Consumer Cooperative Societies
- Unit Cost = is total cost of the product unit sold by source including transportation, taxes, customs, and other charges carried by the product until received by local agent’s warehouses.
Disclaimer
Reproduction of the contents of this publication is prohibited without gaining prior permission from Global Markets. The contents of this report is for information only and should not be relied upon as a substitute for professional advice, which should be sought from Global Markets prior to acting in reliance upon any such information. The opinions, estimates and information provided herein are made by Global Markets in its best judgment, in good faith and based as far as possible on sources deemed reliable. Notwithstanding, Global Markets do not provide warranty to the accuracy of, and disclaim any liability for errors and omissions made in respect of providing such information.
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Managing Director
ali@globalmarkets.com.kw
Global Markets
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