SIC 2043 Cereal Breakfast Foods

Contenidos

• NAICS CODE(S).
• INDUSTRY SNAPSHOT.
• BACKGROUND AND DEVELOPMENT.
• CURRENT CONDITIONS.
• INDUSTRY LEADERS.
• FURTHER READING.

SIC 2043

This industry is comprised of establishments that manufacture cereal breakfast foods. Establishments that primarily manufacture granola and other types of breakfast bars are categorized in SIC 2064: Candy and Other Confectionary Products.

NAICS CODE(S)

311920

Coffee and Tea Manufacturing

311230

Breakfast Cereal Manufacturing

INDUSTRY SNAPSHOT

The United States has the fourth highest per capita consumption rate of cereal in the world (behind Ireland, England, and Australia). The more than 2.7 billion packages of cereal sold in grocery stores each year make it the third most popular supermarket product (behind carbonated beverages and bread) and translate into an average of 10 pounds, or 160 bowls, of cereal per American annually.

At about $9 billion in total industry shipments, the mature cereal industry had a penetration of nearly 96 percent in the mid-2000s, according to ACNielson data, and the industry was growing at a meager rate of about 1 percent annually. The stagnant sales were the result of many factors. Gone are the days of the family breakfast, of which a bowl of cereal was standard fare. The fast-paced American lifestyle had more and more consumers eating breakfast on the go, and many did not eat breakfast at all. Quick serve restaurants like McDonald's, ready-to-eat breakfast bars, bagels, and muffins offer consumers less labor-intensive alternatives to cereal.

In 2004 the cereal market was divided into thirds. Kellogg held 33 percent, General Mills held 31 percent, and the remainder was divided among all other industry players. Consumer awareness of health and nutrition also played a major part in shaping the industry in recent years. Cereal manufacturers began to tout the benefits of eating breakfast cereal right on the package—vitamin-fortified, low in fat, and a good source of fiber.

BACKGROUND AND DEVELOPMENT

Ready-to-eat cereals first appeared during the late 1800s. According to one account, John Kellogg, a doctor who belonged to a vegetarian group, developed wheat and corn flakes to extend the group's dietary choices. John's brother, Will Kellogg, saw potential in the innovative grain products and initiated commercial production and marketing. Patients at a Battle Creek, Michigan, sanitarium were among Kellogg's first customers.

Another cereal producer with roots in the nineteenth century was the Quaker Oats Company. In 1873, the North Star Oatmeal Mill built an oatmeal plant in Cedar Rapids, Iowa. North Star reorganized with other enterprises and together they formed Quaker Oats in 1901.

The Washburn Crosby Company, a predecessor to General Mills, entered the market during the 1920s. The company's first ready-to-eat cereal, Wheaties, was introduced to the American public in 1924. According to General Mills, Wheaties was developed when a Minneapolis clinician spilled a mixture of gruel that he was making for his patients on a hot stove. The clinician approached the Washburn Crosby Company with his product and, following many tests and refinements, Wheaties was born. Other General Mills cereals followed in rapid succession. In 1937 Crispy Corn Kix was introduced. The company also launched the world's first ready-to-eat oat cereal in 1941. Originally named Cheerioats, the product later became "Cheerios."

During the 1940s cereal makers benefited from improved methods of puffing cereal products. Puffing methods employed a principle somewhat analogous to popping corn. Cereal ingredients were cooked and formed into pellets with precisely monitored amounts of water. The product was heated in an enclosed container called a "gun." As the heat increased, the water within the pellets turned to steam. The steam expanded and built up pressure within the gun until the intensity of the pressure caused the end of the gun to open. When the gun opened, the force of the escaping steam propelled the pellets out of the gun into a receiving bin and, as the steam erupted from the pellets, it left them permeated with thousands of air holes. These air holes caused the pellet to become larger and less dense. For example, one type of puffed product made with a pellet measuring 0.156 inches in diameter measured 0.5 inches after puffing. During the first decade of the 1900s, before the development of modern puffing procedures, puffed products were actually shot from cannons.

Many kinds of cereal were manufactured with a device called a food extruder. The extruder mixed and cooked cereal ingredients in a process that...