Use Data to Help Boost Breakfast Sales

CHICAGO — For a daypart that can seem so simple, it can be maddeningly complicated for retailers and manufacturers trying to garner—and boost—breakfast sales.

While 95% of consumers eat morning foods, according to Chicago-based market researcher IRI, 52% most often have a small breakfast or a morning snack. Factors influencing what consumers choose include taste, convenience and nutrition and, no surprise, there are substantial generational differences in breakfast preferences.

In a recent webinar “Winning Breakfast, Generation by Generation,” Sally Lyons Wyatt, executive vice president and practice leader, client insights, at IRI, shared insights and strategies on the subject.

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To boost sales, Wyatt said, there are five big growth opportunities:

• Successfully engage generations individually, including recognizing the different behaviors of each
• Win the weekend by building unique experiences in store and online to attract, retain and/or gain consumers. This includes introducing more foods that center this occasion.
• Balance price, value and premiumization, understanding the effect that pricing and promotion have on specific shopper segments to drive penetration and incremental revenue.
• Serve up sustainability, providing choices to consumers for both meat alternatives and plant-based goods; leverage personalized media to spread the news to consumers.
• Recharge benefit-based innovation, focusing innovation on attributes and wellness benefits that really matter to a retailer’s most valuable consumers; balance assortment toward healthier options/innovations, but don’t ignore the needs for indulgence among younger households.

Realize that breakfast is big business, said Wyatt, who provided IRI data highlighting morning’s magnitude:

• 95% of consumers eat morning foods in a typical week.
• 6 days is the average that food/beverages are consumed in the morning.
• 20% of grocery spending is allocated to food/beverages consumed in the morning.
• There has been a 12% increase in eating/drinking in the morning since the start of the pandemic.

“You see that happening,” she said. “You know it’s important. It’s big business.”

Meanwhile:

• 31% describe the occasion as mini/small breakfast.
• 21% describe it as a morning snack.
• Trends positively impacting sales today are online, convenience, variety and versatility.
• Trends negatively impacting sales today are supply chain, inflation and out of home.

The economic climate has driven swings, according to IRI data.

As of January 2022, compared with the previous year:

• Inflation is up 7%.
• Retail sales are up 16.9%.
• Unemployment is down 3.9%.
• The underemployment rate is 7.3%.
• The average price of a gallon of gas is $3.42 (up 38% from year-ago prices).
• And in the fourth quarter of 2021, economic growth is up 6.9%.

“These different swings have had an impact on what consumers are out and buying,” Wyatt said.

There have been mixed results across the top 10 breakfast categories when compared to 2020; however, elevated at-home eating continues, Wyatt said. Highlights:

In terms of dollar sales:

• Fresh fruit: up 4% versus a year ago; up 16% versus two years ago (YA)
• Milk: down 1% versus YA; up 8% versus 2YA
• Coffee: up 3% versus YA; up 17% versus 2YA
• Yogurt: up 4% versus YA; up 8% versus 2YA
• Snack/granola bars: up 11% versus YA; up 6% versus 2YA

However, inflation coupled with supply chain and demand constraints are impacting unit sales for many categories:

• Fresh fruit: dollar sales up 7% versus YA; united sales down 0.3% versus YA
• Milk: dollar sales down 1% versus YA; unit sales down 4% versus YA
• Coffee: dollar sales up 3% versus YA; unit sales down 4% versus YA
• Yogurt: dollar sales up 4% versus YA; down 2% versus YA
• Snack/granola bars: dollar sales up 11% versus YA; unit sales: no change versus YA

Additional categories outside of the top 10 have found unit and dollar sales growth:

• Perimeter croissants: dollar sales up 20% versus YA; unit sales up 21% versus YA
• Center-store croissants: dollar sales up 19% versus YA; unit sales up 34% versus YA
• Deli breakfast: dollar sales up 14% versus YA; unit sales up 11% versus YA
• Cold brew: dollar sales up 17% versus YA; unit sales up 11% versus YA
• Refrigerated breakfast entrees: dollar sales up 16% versus YA; unit sales up 11% versus YA
• Cappuccino/iced coffee: dollar sales up 14% versus YA; unit sales up 13% versus YA
• Perimeter morning bakery: dollar sales up 14% versus YA; unit sales up 11% versus YA
• Single-serve bottled OJ: dollar sales up 8% versus YA; unit sales up 2% versus YA

“Baked goods have really become a fan favorite, and a lot of that has to do with what’s going on with social media,” Wyatt said of items like bagels, bialys and croissants. On social media there’s talk of being versatile with products.

“They’re able to take some of these baked goods and maybe make a sandwich,” she said. “Or they’re loving the fact that it’s sweet or has their favorite flavor. So, either eating these baked goods alone or eating them as part of a small breakfast or mini snack option, have become some turn-to categories for consumers.”

The pandemic also played a role in changing morning food/beverage consumption choices:

• 42% of the population gained an average of 29 pounds during the pandemic
• 19% overall are consuming healthier food and beverages. Across generations:
  • 22%: Gen Z/younger millennial
  • 22%: older millennial
  • 21%: Gen X
  • 20%: younger boomers
  • 14%: older boomers / retirees / seniors

Consumers are prioritizing, suggesting all breakfast staples should encompass healthier options:

• 67%: Prioritize healthiness for their morning food/beverage choices
• 51%: Look for morning food/beverages that offer specific nutritional benefits (e.g., vitamins/minerals, etc.)
• 30%: Seek immunity benefits as one of the main things when choosing products to buy for consumption in the morning

“This is definitely an area to make sure that if you’re not calling out the benefits of your products, you need to be doing so, and if you are calling them out, call it out in an omnimedia-channel perspective,” Wyatt said.

As a side note, Wyatt said to expect some consumers to turn to private brands over the next year because a majority, 66%, do not see a big difference versus name breakfast brands.

Even if a category is declining, Wyatt said, retailers should zero in on specific areas that are gaining and promote those. For example:

• Milk: No lactose, high calcium, ultra-pasteurized
• Ready-to-eat cereal: low calories, no sugar, vegan
• Breakfast meats: natural claims, low calories and sodium
• Refrigerated eggs: animal welfare, organic claims, no cholesterol

There is an opportunity to strengthen engagement with the morning-eating occasion, especially among Gen Z and millennials, Wyatt said, noting that four in 10 people in total often skip breakfast. Specifically:

• 56% of Gen Z and younger millennials skip breakfast
• 43% of older millennials
• 41% of Gen X
• 38% of younger boomers
• 30% of older boomers/retirees/seniors

While universal morning food staples exist (coffee, eggs, cereal), differences exist across generations. For instance, items that are not universal include tea, yogurt, packaged fruit, fresh bakery, granola, cereal bars, beef/pork protein and hot cereal. Specifically, interests include:

• Gen Z and millennials: milk, tea
• Older millennials: poultry/fish protein; packaged donuts
• Gen X: carbonated beverages, packaged fruit
• Younger boomers: eggs
• Older boomers/seniors: beef/pork protein

“Maybe have some different messaging for your product depending on the generation,” Wyatt said.

One in 2 consumers eat at multiple times during the morning; as a result, most do not think of the occasion as a full breakfast:

• Half are eating more than once, a stat of particular importance to c-store retailers, “where you may be able to entice them to increase frequency by getting them to come in different times of the day for different options,” Wyatt said
• 25%, meanwhile, said it’s fun to experiment with different kinds of foods/beverages in the morning; and it’s even higher for Gen Z/millennials vs. older generations

“That 25% is where innovation can potentially play, and that means if you want to have a mainstream innovation, you’re going to have to work harder to get others to try it because you’re going to find that people like to buy and eat the same things over and over again,” Wyatt said.

And different people refer to “breakfast” differently. The term that best describes the typical morning eating/drinking occasion:

• 31% mini/small breakfast
• 23% full breakfast
• 21% morning snack
• 17 morning fuel up

And when people eat also varies:

• 59% eat between 7 and 9 a.m.
• 32% between 5 and 7 am
• 28% between 9 and 10 a.m.
• 5% before 5 am
• 16% 10 to 11 a.m.
• 10%: 11 am to noon

The biggest shifts occur toward hot foods and away from cold foods on the weekend:

• Hot beverages: 69% during the week and on weekend
• Hot foods: 59% during week, 66% on weekend
• Cold beverages: 54% during week, 52% on weekend
• Cold foods: 44% during week, 37% weekend
• Room-temp foods: 26% during week, 23% on weekend

More than 35% of dollars spent on breakfast occur on the weekend, Wyatt said. This is an opportunity to communicate differently during the week and weekend.

As younger generations age, certain factors will become even more important with snack selections, like sustainability, as 29% strongly consider the sustainability aspects of a morning food/beverage product before buying it.

“Not only do we see it in snacks, we’re seeing it in breakfast and across the board,” Wyatt said

Also, consumers are not just saying that sustainability influences their choices, but they are also buying more and more morning-occasion products with sustainable marketed attributes:

• Products that have renewable packaging content have seen dollar growth up 85% from a year ago
• Eco-friendly certified: up 17% from YA
• Recyclable: up 9% from YA
• Renewable energy: up 4% YA
• Sustainability certified: up 4% from YA