by Mike Blain
The Free Press
I kicked my daily Kellogg's Frosted Flakes habit about seven years ago. But weaning myself from the sugar-coated feast had nothing to do with eating healthier - I simply couldn't afford Tony the Tiger once I was in college. When I had to start buying my own food, it was quickly apparent that most breakfast cereal was ridiculously expensive. I switched to buying bulk granola or generic corn flakes, with an occasional relapse into Honeycombs or Frosted Mini-Wheats.
Since then, I hadn't given much thought to cereal prices. This May, I just happened to notice that the price for a bag of granola at Albertson's was $1.39 a pound. Intrigued, I started scanning the cereal aisle and realized this was less than half the price of most cereals and about a third the cost of many others. Frosted Flakes came roaring in at $3.26/lb. Trix was $5.59/lb. And Kellogg's Variety Pack (those little boxes that have about two bites of cereal each) topped them all at $6.47/lb.
I counted all the varieties of cereal (and while doing so I was asked by a concerned stockperson who must have thought I just couldn't decide between Kix and Trix and that's why I was pacing the cereal aisle looking at boxes). I found 145 types of cereal on the shelf. I found 11 cereals that were less than $2 a pound, with 10 of them being some type of granola or generic flake. The other one was Grape Nuts which was only $1.87/lb, but the entire box cost nearly $8 (says something about the density of Grape Nuts). I found six cereals that cost more than $5 per pound. Most were in the $3.50 to $4.50 a pound range.
I tried to figure out what the mega-bucks cereals had in common. Those more than $5 a pound seemed to be the puff-ball, full-of-air stuff that always floats in milk no matter how soggy it gets (Trix, Kix, Double Dip Crunch etc.). The boxes were the same size as the others and cost about the same. But they weighed far less because they were half air so they cost more per pound. A box of these high-buoyancy cereals easily could be a Coast Guard-approved flotation device. Strapped to your chest, one of these cereal boxes might save your life if you fell out of a river raft, but they sure don't give you much bang for your buck.
Then I looked at other food items that I had always thought were far more expensive than cereal. Kraft Extra Sharp Cheddar Cheese was $4.98/lb. A pound of yogurt-covered almonds was $4.99, as was a pound of King salmon fillets. A pound of Millstone Irish Cream coffee beans was $5.49. Trix - multi-colored, cooked puffballs - beat them all.
Why is brand-name breakfast cereal so expensive? It's not because any of the individual ingredients cost a lot. Not surprisingly, much of what you pay for cereal goes toward advertising.
In its Summer 1993 issue, Common Cause Magazine takes a look at "The Cornflake Cartel" and found that for one box of cereal that cost $2.20, the raw ingredients cost only 14 cents - about 6 percent of the total price. At Albertson's, the price mark-up for most cereal is around 20 percent. If you add in the cost of the cardboard box, plus shipping and distribution, you'd find that up to half the price of a box of cereal goes for advertising, Michael Jordan Wheaties endorsements and other promotions.
In the Common Cause article, New York state Attorney General Robert Abrams says that over the past eight years, the price of all food eaten at home has risen 37 percent, while the price of "ready-to-eat" cereal has risen 71 percent. One Wall Street analyst said that the only retail costs rising faster than cereal were the prices for prescription drugs.
The Federal Trade Commission, concerned with the cereal industry's high profits, massive advertising and highly concentrated structure, charged top companies in the 1970s with colluding to keep prices artificially high. After four years in court, the case was thrown out by a judge who had just been appointed by newly elected President Ronald Reagan. Check out the Common Cause article for the details.
When I first looked at a box of Double Dip Crunch in May it was $5.12 a pound. Two weeks later it had jumped to $5.41 a pound. I'll take a jumbo bag of Good Day Corn Flakes at a $1.14 a pound any day, thank you.
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Contents on this page were published in the July/August, 1993 edition of the Washington Free Press.
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Copyright © 1993 WFP Collective, Inc.