Get ready to pay the more money for fewer Cheerios, starting June 25. General Mills has announced that they will be decreasing the size of their popular cereal boxes as a cost cutting measure, as well as raising the prices. From the Wall Street Journal:
The company also hopes its “Right Size, Right Price” initiative will boost margins — something all food companies are trying to do as they get squeezed by lower-cost, private-label goods and more-expensive fresh and organic food.
Less Cheerios for more money! Yay! Wait. —MEGHANN MARCO
General Mills Raises Price On Line of ‘Big G’ Cereals [Wall Street Journal]
(Photo: iwantamonkey)
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@Hexum2600: Take it easy. I said I know first-hand that it doesn’t happen with this particular brand of cereal. Yes, it was a qualified statement, but I’d appreciate it if you read it before calling me an idiot. For a well-known brand name like General Mills it doesn’t make a ton of sense to do this because part of what they’re selling is a name.
If you’re Flavorite or some other brand that’s already seen as a lower quality product, then it makes more sense to sell under as many different names as you can, because you’re not selling what’s regarded as a premium product.
“@bbbici: “This is just gouging made possible by consumers’ awareness of rising fuel and corn prices.”
Sorry, but where are you getting this information? Ingredient and freight costs have, in fact, gone up significantly in the past 18 months or so.”
In your typical box of cereal, ingredient costs are maybe 10% of the purchase price. Processing, company overhead and pay, manufacturer profit, advertising, and shipping make up about another 50%. 40% goes to the retailer. Therefore, for a $5 box of cereal, about 0.50 goes to ingredients. If ALL ingredient prices doubled (which they haven’t), the price of a box of cereal should therefore increase by no more than 0.50. The increased shipping cost per box of cereal is marginal, pennies.
@bbbici: I see what you’re getting at, but it’s not just ingredients that have gone up in price. Packaging is more expensive. Energy is more expensive, which increases company overhead and manufacturing. Manufacturers (from the info I’ve been privvy to) have been eating at least some of this cost increase over the past few years, but margins are thin for this product platform and at some point the cost needs to be passed on.
I’m sorry I don’t have concrete figures, but I don’t work in costing. And I’m not saying that they’re increasing costs without the intention of putting extra pennies in their pocket, because that’s not how business works. But it’s not part of some grand conspiracy. This cost increase has probably been on deck for a long time, but in this particular industry no company wants to be the first to do anything because they’ll take such a hit from it. General Mills was just waiting for someone (i.e., Quaker) to do it first. Kellogg’s and Post may follow suit in the near future.
@zaky: I, too, live in NYC and for a lot longer than 2 years. I’ve never paid $5.00 for cereal. You’re just shopping in the wrong places. Food Emporium is very over-priced. So is D’agostino’s. For cereals try sales at Rite-Aid, Walgreen’s or CVS. This week I got two 15 oz. boxes of Cheerios for $4 (less a coupon for .75) Even Food Emporium had them on sale this week 2 for $6. If it’s too much trouble to check sales at the local stores,or to buy in bulk, or buy generic brands,and you have money to burn, walk in to any store and pay whatever they ask for what you want whether it’s for cereal, cell phones or cars.
I’m trying to not violate a couple NDA’s here, but I think I can safely say that General Mills took about 9 cubic inches out of their boxes.
@cabinaero: Really, you too?
@Dervish: Yeah me too. I don’t work for the Mills directly but, instead, work for suppliers which are involved in the pacakging retool down to the smaller boxes. (Not at the box plants or the bakeries. Think more upstream.)
general mills can take their new smaller boxes, crank up some Weezer, and weeze’em up their asses.
How come no one has mentioned TARGET???
Their cereal is amazingly cheap and their Target brand versions of the “real thing” are actually GOOD and come in a box…not to mention they are usually 1.97.
Mini wheats for 1.97, cinnamon toast crunch for 1.97…all the Target brand food I’ve tried so far has been good and its REALLY cheap.
I either go with the Malt-O-Meal bags or the DeMoulas store brand. Admittedly, I’m not a cereal snob, but I really can’t tell the difference (except for the 50% I save).
As a side note, yes, gasoline was $1.00 a gallon in the fall/winter of 1999. I filled up my generator before Y2K in December of 1999, and regular was 99 cents a gallon. Oil was below $20 a barrel.
Mmmmmmm, my daily 1/2 cup of Oatmeal (dry, before cooking) looks even better. One big tube of Quaker instant lasts me nearly a month AND gives me 4 grams of fiber, 2 of which are soluble. Only Cheerios comes close to that, and it still has sugar.
Oatmeal with 2 packets of splenda, yumTASTIC, cheap and better for you than overpriced unhealthy cereal.
The corporate spin doctors never cease to amaze me with the nonsense they come up with. I have to hand it to them for spinning this so that somehow in the eyes of General Mills the customer is coming out on top.
Companies have been doing this for years… it’s nothing new. Apparently GM still hasn’t found the “Right Size or Right Price.”
Tell GM what you think about companies that insult your intelligence. I did.
http://consumercontacts.generalmills.com/ConsolidatedConta…
The part I never understood is why repackage? All those changes take $$ to implement. More I would suggest that would just raising the price at the register.
I buy our cereal in the big plastic bags, no box. Saves money, has the same product.
I refuse to support and industry which was founded upon the ramblings of a white-supremacist quack doctor who was totally obsessed with his bowels, enemas, vegetarianism, genital mutilation, and thought sexual activity, eating meat, and drinking alcohol & caffeine were the worst thing you could do to a human body.
Hooray for Ethanol!
“as they get squeezed by…fresh and organic food.”
This is precisely why I pay more for them – because they aren’t genetically engineered and pumped with preservatives.
@Ponygirl: Where the heck do you think the government got the number from? You think it’s made up? You think your memory of what you paid for gas SEVEN YEARS ago in one location overrides collecting data as events happened on a national scale? Did YOU check the link? All Grades for the whole year for the whole country. ALL GRADES. For the WHOLE YEAR. For the WHOLE COUNTRY.
So, OF COURSE you remember getting gas for less than that. You probably bought regular at the cheapest gas station in your area. I would expect that. That, however, does not reflect the average price of gas.
What is wrong with people? The government isn’t ALWAYS lying to us. Only sometimes and usually about the important stuff.
@Starfury: Thanks for the tip. $3 for a half-gallon of cream is a HUGE savings!
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@JohnMc: Reducing the retail carton size means you can reduce the shipper size which means you can fit more shippers on a pallet.