Breakfast cereals are many people's choice as the first meal of the day. It is eaten hot or cold, usually mixed with milk and sometimes yogurt or fruit. Apart from satisfying the taste buds of consumers, the cereals are also a good source of vitamins, minerals, folate, dietary fiber as well as proteins and carbohydrates.
Originally manufactured in America in the 19th century, the product's popularity grew rapidly as a healthy choice of breakfast, particularly for those rushing off to work. An article by Persian daily Forsat-e Emruz looks into the market potential and investment opportunities in the sector.
The breakfast cereal industry has been experiencing steady growth the world over, with manifold increase in per capita consumption and the variety of products over the past decade. In 2008, the total breakfast cereal sales were slightly over $13.3 billion in the US alone. The number of different types of breakfast cereals in the US grew from 160 in 1970 to 4,945 in 2012.
The competitive breakfast cereal market in Iran is largely dominated by imports from multinational brands such as Kellogg and Nestle, according to a report by market research group, Euromonitor International. During 2013 and most of 2014, many key international suppliers faced a complete importation ban, which affected the growth of the category. However, although this ban was removed in 2014, it is very likely that they may once again face similar import bans for various economic or political reasons. The currently small number of domestic corn flakes manufacturing mills provides good potential for growth in the coming years.
Competitive Advantages
The popularity of breakfast cereals in western countries could be linked with modernization and the people's need for healthy and quick breakfast options. Iran has a relatively young consumer base and more than 70% of the population lives in urban areas. Hence, the demand for the product could be expected to grow in the coming years with more people adapting to the quick-paced lifestyle.
Moreover, the raw material required for production of corn flakes such as maize, sugar, barley malt extract, honey, etc. are easily available in the country, thereby eliminating the need for importing the raw material which will lead to considerable saving in production costs.
The maize is also processed for the manufacture of oil, flour, starch, liquid glucose, etc. and snacks such as popcorn and fried corn flakes. Therefore, a corn flakes manufacturing unit could increase profits by setting up parallel production lines for extracting various products from maize.
Capital Requirement
Establishing a breakfast cereal manufacturing company requires an area of at least 2,000 square meters and a workforce of about 20 people. The machinery and equipment for corn flakes production consist of mixer, screw conveyor, conditioner, twin screw extruder, air conveyor, flaking machine, air conveyor, multi-layer oven, hoister, salt cooking machine, sifter, sugar melting machine and sugar sprayer. It is estimated that a capital of about 50 billion rials ($1.5 million at market exchange rate) is required for setting up the production line.
Paying due attention to marketing and advertisement is recommended since some Iranian households might not be well-familiarized with the product. There might even be a negative notion among consumers, arising from associating corn flakes with chips and other fried snacks. Demand for the product could be expected to rise considerably with suitable introduction through mass media and arriving at a sense of the consumers' choices.
