Chocolate Cereal Products in Kuwait

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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Global Markets

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