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IN OATMEAL,THERE'S A TOTAL WAR GOING ON : General Mills Entry Gives Quaker Oats a Few Lumps

October 14, 1987|JESUS SANCHEZ | Times Staff Writer

By mixing in hefty doses of vitamins, iron and advertising, cereal makers hope to turn lumpy old-fashioned oatmeal into a flashy new health food.

For years, the oatmeal industry has been the sleepy domain of Quaker Oats Co. and its 110-year-old namesake, which commands 67% of the $480 million in annual hot cereal sales. But the oatmeal section of the supermarket has recently been turned into a battleground between Quaker and its old rival General Mills.

In July, General Mills introduced its Total Oatmeal, featuring eight vitamins and iron and hailed as having "more nutrition than any hot cereal" in a $12-million advertising campaign. By touting the nutritional aspects of its oatmeal brand, General Mills expects to successfully challenge Quaker Oats.

Quaker has taken General Mills seriously and for good reason: hot cereals are its most profitable product. The company has responded by introducing a new product with 11 vitamins. It has also unveiled a new advertising campaign featuring grandfatherly actor Wilford Brimley--star of the television program "Our House." The ads have appeared on prime-time television and in the pages of Time magazine.

Quaker Oats' advertising and marketing budgets have been doubled to $60 million. "This is the most advertising we have ever done for the product," said company spokesman Ron Bottrell.

A bland mixture often sweetened with sugar or cinnamon, oatmeal is a standard breakfast fare in many kitchens and is considered most popular with children and the elderly. And nothing, say the food makers, tastes better than a hot bowl of oatmeal on a cold morning. In fact, oatmeal sales jump when temperatures reach record lows.

For those who are health conscious, oatmeal might appear to be a perfect breakfast food. It's low in sodium, low in sugar, low in calories (about 110 per serving, not counting the sweets that most consumers add), high in fiber and--some studies suggest--helps lower cholesterol.

But oatmeal sales haven't taken off with consumers' growing demand for healthier foods, and the problem might be one of image.

"Everybody has different memories about oatmeal," said General Mills spokeswoman Kathryn Newton. Many of those memories are not pleasant ones.

"Your mother forced it down you when you were a kid," said food industries analyst Roger W. Spencer at Paine Webber Inc. "I guess it's healthy for you, isn't that what they say?"

Adds Newton: "A lot of people do think it's mushy tasting stuff."

However, General Mills is gambling that Total oatmeal--like its Total dry cereal--will appeal to health conscious young adults. "I think it's going to bring additional people to the oatmeal market," Newton said.

Spencer agrees. In the cereal business, he said "product introductions seem to expand the market."

Despite a recent decline, Quaker oatmeal sales have been given a boost by instant oatmeal--which is made by adding hot water to a dry oatmeal mixture. New flavors--such as peaches and cream, dates and walnuts and apple-cinnamon--have also attracted new oatmeal eaters.

Instants have been credited for increasing Quaker oatmeal sales by a 3% annually--exceptional growth for a product that has been around for more than a century. "We don't (advertise them) as an alternative to standard oatmeal," said Bottrell, "but as an alternative to ready-to-eat cereals." But stiff competition with dry cereals and a warmer than normal winter last year caused the volume of Quaker instant oatmeal to decline by 4% in fiscal 1986.

Oatmeal sales are expected to rebound this year, however, as a result of the heavy advertising, Bottrell said. "What we will probably see is record oatmeal sales."

THE HOT CEREAL MARKET Market share, in percent, based on total sales of $480 million in 1986. Quaker Oatmeals 67% Nabisco Cream of Wheat 18% All Others 15% Source: Adweek

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