Granola bars and snack bars used to take up a few spots at the end of the cereal aisle. Now there are hundreds of brands and line extensions promising to be zero in trans-fats; low allergenic; all-organic; preservative-free; made with whole-grains, and/or vitamin-fortified.
Retail sales are expected to reach $1.4 billion this year, a healthy growth of 48 percent between 2001 and 2006, according to Mintel International. But sales growth slowed to just 1 percent between 2005 and 2006.
"It's a function of the infiltration of private label products into a maturing market," said David Morris, editor and analyst at Mintel. "When private-label becomes a more prevalent component of a market, it depresses overall sales because the products are cheaper."
New product introductions also are thinning out. Last year, marketers unleashed 562 new snack bars into the U.S. retail chain, according to Datamonitor's Productscan, a new-products database based in Naples, NY. By the end of 2006, that figure will have dipped to less than 350.
"This category got impacted by the low-carb trend, which pumped up new introductions in 2004 and 2005," says Productscan Director Tom Vierhile. "A lot has shaken out since then, and companies are not trying to launch so many products now."
Granola bars appear to have more solid footing than breakfast bars, the Mintel study concludes, because people like to snack on these products all hours of the day, whereas breakfast/cereal bars are stuck in a morning-consumption rut.
Granola bars account for 53 percent of sales this year--up 15 percent from 2004--and breakfast/cereal/snack bars comprise 47 percent, a 9.6 percent increase, according to the study. Mintel predicts overall category growth will slow but remain steady, with U.S. retail sales increasing 22 percent from 2006 to 2011.
Kellogg Co.'s Nutra-Grain bar is No. 1 in the breakfast-bar segment, with sales of $100.8 million for the 52 weeks ended July 16, a decrease of 5 percent from the same period in 2005, according to Information Resources Inc. But the marketer is making up that loss with its Special K breakfast bar line extension, No. 2 in the segment, whose $80.9 million in sales represents a 52 percent increase.
The line extension trend is helping Kraft Foods make inroads in the category. Its South Beach Diet snack bars claimed $66.7 million in sales for that period--up 272 percent--to reach the No. 3 spot, according to IRI.
The Mintel study found packaged food companies that exert marketing muscle behind new product introductions and brands and are better able to gain shelf space for their products. For example, Kraft backed the rollout of its Honey Bunches of Oats and other Post cereal bars with a $20 million push, Morris said. IRI figures place the Honey Bunches of Oats bar at No. 8 with $18 million in sales for the 52 weeks ending in July, an increase of 107 percent from the same period last year.