Not so sweet? Honey Monster cereal value to plummet €10m

The Halo Foods cereal brand – owned by Raisio – underwent a major revamp last month that saw its ‘Sugar Puffs’ name replaced with ‘Honey Monster Puffs’ and the product reformulated with more honey to reduce overall sugar content. The cereal is now being rolled out across UK stores.  

Andy Valentine, marketing director at Halo Foods, said the revamp was much-needed for a brand that had lacked investment under previous owners. “We feel that the product re-launch, coupled with our move to bring the product name in line with the iconic Honey Monster character, can only amplify this position and help grow our share of the cereals category,”​ he said at the time.

Today however, Raisio issued a financial statement with a very different sentiment.

UK cereal woes​

Raisio said the UK breakfast cereal category was “not growing”​ and overall profitability had declined.

“Sales and profitability of Honey Monster cereals are therefore also expected to remain permanently below the normal levels of recent years. In the last quarter of 2014, Raisio will write down the book value of the Honey Monster Brand by 10 million euros as part of the restructuring of activities related to the acquisition [of Benecol],”​ it said in a statement.

Earlier this month during Raisio’s Q3 2014, CEO Matti Rihko said its cereals and snacks business had returned to profit, but acknowledged there was still much work to be done to achieve profitability levels and sales consistent with objectives. Sales volume of Honey Monster cereals, he said, had levelled off – an improvement to the earlier decrease.

However, across the UK other cereal brands were also suffering, according to data from Mintel.

Market leader Kellogg posted a 4% fall in value sales for the 12 months to April 2014. Volumes were also down 5.5%.

Write-down relates to IFRS rules​

Heidi Hirvonen, communications manager at Raisio, explained the move to write-down the book value of Honey Monster cereals related to International Financial Reporting Standards (IFRS) rules and so was based on the real performance of the brand.