What Type of Business Venture is Cereal Partners Worldwide SA? Cereal Partners Worldwide SA was established in 1991 by Nestle and General Mills to produce breakfast cereals. The company’s headquarters is in Lausanne in Switzerland, and it markets cereals in over 130 countries (except the US and Canada, where General Mills sells the cereals directly).
Although many of the company’s cereals were made from General Mills, some are sold under Nestle. Some of CPW products are sold in Australia and New Zealand under the Uncle Tobys label.
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What Kind Of Business Venture is Cereal Partners Worldwide?
Cereal Partners Worldwide, a joint venture of General Mills and Nestle, has been able to tap emerging market growth in order to increase its share of the global breakfast cereals industry from 6.4% to 8.3% between 2001 and 2005, as Euromonitor International’s 2007 Breakfast Products Global Report reveals.
This year’s report structure was redesigned. The content has been refined to provide hard analysis insight, accompanied by charts and graphs. Case studies are also included.
The 2007 Global Report has a strong future focus. Each section ends with strategic implications in short to medium terms, and the last section is devoted to market forecasts and possible trends to follow in the next five years.
Cereal Partners Worldwide’s performance in emerging markets like China and Russia is remarkable. Kellogg, the market leader, has not yet established a strong presence. It grew its breakfast cereals retail value share from 7.6% to 12.7% between 2005 and 2006, moving from fourth to fifth in the rankings. In the latter, it was first introduced to the market in 2004 with a 25.2% market share, which was maintained for the next year. However, it became the market leader in 2004 by 0.1 percentage point.
While the Russian and Chinese market is still small (US$263million and US$71million respectively in a US$23.4billion global industry), their growth is rapid. Per capita consumption rates remain low, especially in China. This leaves a lot of potential for future growth.
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Nestle’s brand identity gives you a jumpstart in China.
Cereal Partners Worldwide was the first to enter the Chinese breakfast cereals market when it opened a factory in Tianjin. It has used a combination of marketing and branding strategies to increase market share, especially in children’s cereals, where it held a 60% market share in 2005.
Because most of the breakfast cereals are still being developed by indigenous players, they have limited marketing budgets and struggle to stay competitive. Cereal Partners Worldwide’s breakfast products are known as “Que Cao,” which in Mandarin means “bird’s nest.” The brand’s Chinese marketing strategy is based on this name, a universal logo/logo, and the tagline “Choose Quality. Choose Nestle”. These are featured on the packaging, point of sale materials, and media advertising. Also, sampling and promotions in-store are used. Unlike its local rivals, Cereal Partners Worldwide can spend a lot on television advertising.
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This allows the marketing of these breakfast cereals to be integrated into a larger range of products. Nestle has been a prominent brand in China’s packaged food market since 1990. This provided a great platform for Cereal Partners Worldwide to launch in China. This approach has risks, as Nestle’s reputation in China was damaged in 2005 when its baby formula was discovered to have been contaminated with iodine. Cereal Partners Worldwide’s Chinese operations seem not to have suffered from the scandal.
Nestle’s China marketing strategy is based on segmenting the market into urban and rural customers. Nestle targets the most advanced products to the wealthy urban population. This group is expected to increase in number by around 2010. It also emphasizes issues related to health and wellbeing. It adapts existing product lines to address China’s declining rural population. This helps highlight issues such as affordability and basic nutrition.
Keyword: What Kind Of Business Venture Are Cereal Partners Worldwide
The Chinese market will see sociological and demographic changes.
In 2005, 29% of Chinese breakfast cereal sales were by value. This is not much different than the global figure, which was 30%. Cereal Partners Worldwide’s market share in China and worldwide may be under threat because adult breakfast cereal consumption is increasing at a faster pace than that of children.
China has two opposing forces. The country’s birthrate fell dramatically, mostly due to the One-Child Policy. However, disposable income is increasing rapidly so that families have more money to spend on each child. The current generation, nicknamed China’s “Little Emperors,” is a market that could be exploited for premium and value-added goods. Cereal Partners Worldwide must make sure this happens if it does not regain its position as the leader in this area.
Trix, Star, and Koko Krunch are Cereal Partners Worldwide’s three children’s breakfast cereal brands in China. They had market shares of 25% to 20%, 15%, and 15% in 2005. These offerings are not particularly healthy, making the company more vulnerable to other companies with better health and wellness programs as concerns such as childhood obesity rise in China.
Also, beware of these four car dealer tricks. Cereal Partners Worldwide faces another risk: It is weak in hot cereals. Hot cereals accounted for nearly 53% of all breakfast cereal sales in 2005. This number is expected to rise to 57% in 2011. However, Cereal Partners Worldwide expects that the percentage of children’s cereals will decline from 29% – 26% during the same time.
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Keyword: What Kind Of Business Venture Are Cereal Partners Worldwide
A greater presence in packaged foods proves to be a significant advantage over Kellogg’s.
Cereal Partners Worldwide’s initial strategy in China was heavily based on its corporate connections with Nestle. Nestle’s strong presence in the larger packaged food market gave it an immediate market profile that allowed it to gain a significant advantage over Kellogg’s, which is confined to breakfast products.
Its wider strategy teaches other breakfast cereal manufacturers how to succeed in developing markets. Segmentation is crucial in countries with high household income disparities. It also highlights the risks and benefits associated with having one brand identity in multiple categories. This strategy shows the advantages of a well-resourced and diverse marketing strategy. Its experience shows that being too dependent on one market segment can lead to brand vulnerability in changing markets.
