Two years after launching Bamba brand breakfast cereals with considerable fanfare, Nestle-Osem's management has decided to abandon the venture and remove the Bamba cereal from supermarket shelves, TheMarker has learned.
An estimated $1.5 million was invested in marketing Bamba cereals, of which about $1 million was spent on campaigns over the past two years, via McCann Ericsson. Another half a million was invested in marketing activities, market surveys and sales promotion. Nestle-Osem also invested millions of shekels in product development, which lasted a year and a half, and in a production facility in a special plant in Poland.
A few months after the launch, it was clear that the products were not doing well. At the height of their popularity, Bamba cereals captured only a few percent of the market, and their market share declined to a fraction of a percent. During the first year and a half, Osem made a concerted effort to increase sales of the brand, but to no avail. Special offers did not manage to boost sales, and the public's preferences were clear. For the past six months Bamba cereals have practically been gathering dust on the shelves.
The original decision to expand the Bamba brand into breakfast cereals was not made lightly.
"The effect of the expansion of a brand like Bamba is critical," said Osem CEO Dan Propper in an interview with TheMarker two years ago, on the eve of the launch. "This is why we invested $400,000 in market surveys. More than 1,000 children tasted the product before we decided to start marketing it."
At that time, Propper had no thoughts of failure.
"We are combining the strengths of a brand children love," said Propper in that interview, "with the technology of breakfast cereal giants Nestle and General Mills. This is a giant step for us, but also a sure one. We have no doubt that we will succeed. If we had any doubts, we would not have launched the new product."
The success of Cheerios
In contrast to its failure with Bamba cereals, in the past two years Osem has succeeded in the breakfast cereals arena with another brand - Cheerios, whose target market has been expanded from just children to the whole family. Sales of Cheerios have risen considerably and are now approaching 9 percent of the cereal market. It is this success that prompted Nestle, which makes Cheerios, to make a strategic decision to focus marketing efforts on Cheerios and step back from Bamba.
"While children really love the flavor of Bamba as a snack food," explains an Osem source, "they are not interested in eating Bamba as a breakfast cereal with milk. The company's marketing efforts over the past two years included an examination of the sales potential of this product line around the world. When no demand was created for the cereals in other countries, it was decided to discontinue the brand."