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:

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.

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

Table 3 direct competition minimum price comparison in private supermarkets and cooperatives

Table 4 direct competition maximum price comparison in private supermarkets and cooperatives

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

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.

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