The maker of Honeycomb and Grape-Nuts is about to give cereal lovers a real bonus. But don't dig through the box for the surprise. The good news will be on your grocery bill. Post, the third largest cereal company, announced that over the next few months it will cut the cost of its cereals about a dollar a box.
That's great news for American shoppers, who buy 2.7 billion packages of cereal a year. If those boxes were put end to end, they would reach all the way to the moon and back!
Americans have been complaining about the high price of cereal for years. Although the cereal in a box costs only about 50 cents to make, boxes often sell for $4 or more.
The steep prices have made people suspicious. More than 85% of cereal sold in the U.S. is manufactured by four companies: Kellogg's (the biggest), General Mills, Post and Quaker. Last year members of Congress asked for an investigation to see if these companies were secretly agreeing to keep prices high. So far, no investigation has been made.
Why Is It So Expensive?
The cost of cereal includes more than just the flakes or O's you eat. The basic ingredients are similar in every box: grains and sugar. So big cereal makers work hard to convince buyers that their brands are special.
To catch your eye, these companies create colorful boxes with cartoon characters on the front, games on the back and maybe a prize inside. TV commercials and coupons are also attempts to get your interest. Ads and fancy packaging cost money, and that adds to the cereal's price.
Will Corn Pops Be Cheaper?
The Post company decided to act after its own survey showed that 59% of shoppers were angry about high cereal prices. "We're responding to consumers who have gotten very upset," says Mark Leckie, general manager of Post Cereal.
But Post isn't cutting prices just to be nice. It hopes that its lower prices will attract buyers away from Kellogg's and other brands of cereal.
So far, the makers of Corn Pops and Lucky Charms don't seem worried. Neither Kellogg's nor General Mills has announced plans to cut prices. Just wait, says Ken Shae, an expert on U.S. food-buying habits. "For Kellogg's and General Mills, it will only be a matter of time," he says. "Eventually, those cereal makers will feel the crunch and cut prices too."