Price of Cereal

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So what is the deal with the price of breakfast cereal?

In the grocery stores in my area, a box of brand-name cereal goes for $4-$6. The price is obscene.

But go over to Walmart and the same box of cereal is anywhere from $1-$2 less. If I buy the Walmart box of wheat bran flakes, which are identical in nutrition, calories, ingredients and quality to the Kellogs version, the price is $1.50 vs. $3.98. At the grocery store, the Kellogs cereal is $5.25.

So I stock up at Walmart on cereals. I hate shopping there, but man, the price difference is just too huge to ignore.

Obviously, to make a box of wheat bran flakes including printing and packaging is way less than $1.50. The profit margin to Kellogs and the store must be astounding, even considering the advertising costs, which can't be much since this cereal is never advertised.
 
I agree, which is why I split my shopping between Whole Foods and Wally World...

I buy meat, fish, and produce at Whole Foods, and staples like water and boxed stuff at Wally World.

I haven't been in a "normal" grocery store in awhile, and even then it was only for one item when I was in a hurry.

That being said, we don't eat much cereal anymore, it's expensive, not that good for you (the kind I like to eat), and eggs and bacon are much more yummy. :)
 
OK. I'm out of restraint. Who is that in the avatar, Jason?

Larry, Processed cereal was from your bachelor days. They're gone. Gone, gone, gone. Ever look at the quarterly report for the cereal makers? Paying for advertising and branding on a generic product is mucho profitable! :)
 
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We do a lot of our shopping at Sam's Club, and supplement it at a local store called Amelia's that sells closeout stuff, and what looks like stuff from stores that are closed or getting rid of inventory. We feed a family of three, quite well too, for a suprisingly low sum that way. Sean is the only one eating cereal, though. Cathy and I are doomed to Slim Fast for the foreseeable future :(
 
That's Rebecca Gayheart, loved watching her in the otherwise average show Earth 2. Plus, she's beautiful, and that's always a good thing.

I've bought exactly two boxes of processed cereal since Sue moved in with me last year, so I suspect you're on to something here! :D

I've eaten more breakfast in general, and far more eggs in the past six months than I have since I moved away from home 12 years ago.
 
larrysb said:
So what is the deal with the price of breakfast cereal?
Click to expand...

Here's what we pay for some common brands from our wholesaler:

Cheerios

47.46 per case which is 3.39 per unit. We retail it at $2.50 to 3.65
(we operate warehouse stores and conventionals in different areas)

Wheaties

48.75 per case which is 3.48 per unit. We retail it at 2.48 to 3.58

Kelloggs Corn Pops

42.41 per case which is 3.03 per unit. We retail it at 2.50 to 3.59

Now these are catalog cost and don't include freight. But the case
costs are probably pretty close anywhere in the country.

Get me the UPC code off the box and I'll tell you what the wholesale
cost is from our supplier.

Now a certain LARGE retailer (I don't want to point fingers) that is
gradually taking over all of retailing engages in a lot of predatory
pricing. They'll sell lots of stuff at way less than cost to put other
retailers out of business in an area. This does a couple things .. eliminates
the competition for both sales and labor. If there's no where else to shop
or work then they can charge what they want .. and pay their help
poverty wages with no benefits. Check their pricing in different
markets .. one with competition and one where they've shut down
the local operators.
 
There is the issue of wages. Most supermarkets are unionized and thus pay a living wage. Walmart is not. Don't want to get into a labor argument but there are no free lunches.

Here in Connecticut we are dealing with the recent finding that over 50 percent of the Kids in our State funded health insurance programs (for kids without health Insurance) are for kids who's parent work at the big national retailers, led by Walmart. As a tax payer I was kind of ****ed off to learn my taxes subsidized Walmats low wages and crappy benefits. So, that $2 off cereal may not be $2 cheaper after all.
 
I work(in semi-retirement) for one of the largest food retailers(2500 stores, coast to coast) in the country. Did you ever read the qualifier on the "store-brand" package?
Packaged for distribution by "Store-name", city - state. Private-label is big business. Don't you suppose Campbell is producing private-label soups, or Kellogg producing (well, you get the picture).

When I was a teenager I worked summers at Black & Gay Cannery, Thomaston, Maine. We did baked beans, canned blueberries, squash, pumpkin, apple sauce, clams, and other products. Right beside a plant shipping dock was a railroad siding. We'd load hundreds of cases of our products into boxcars which would travel far and wide in the USA. Now, if one happened to be working with the labeling crew, in a single day we might "label" the following cans: Kid Glove(our own brand); FINAST(the old First National Stores chain in New England and New York); Yor Garden(the old A & P Food Stores chain); and upteen dozens of other labels for store chains around the country whose stores other America's regions would never see. And it was all the same product, regardless of brand-name on the can. Private-label can deliver equal quality at lesser price.

Fred Black, with whose grandchildren I went to School, has been gone for decades and so has his company. The building is stilll there but is occupied by Lyman-Morse, Cabot Lyman's company which produces magnificent yachts, both sail and power), including Miramar, the lovely sailboat built for the late Christopher Reeve.

HR
 
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I went on Weight Watchers 12 weeks ago and lost 22 lbs.

My routine for several years has been to have a high-fiber cereal for breakfast every morning. Getting older has well, uhhh, slowed things down that I need to keep my fiber intake on the upside. The only difference for breakfast has been 1% milk and measuring the cereal to 3/4 cup. I just can't do skim milk. Never have liked sweet cereals. Even as a kid just din't like it.

If I had my druthers, I'd make myself an english muffin with sausage and egg and cheese. Just like McDonalds. Or fried eggs and bacon on grits Mmmm. I love greasy food. But that's not going to work and keep my weight at a reasonble level.

Don't know what else I'd eat for breakfast. I guess fruit, but that leaves me hungrier than before I eat.

The price of cereal, even the generic stuff is out of control.
 
corjulo said:
There is the issue of wages. Most supermarkets are unionized and thus pay a living wage. Walmart is not. Don't want to get into a labor argument but there are no free lunches.

Here in Connecticut we are dealing with the recent finding that over 50 percent of the Kids in our State funded health insurance programs (for kids without health Insurance) are for kids who's parent work at the big national retailers, led by Walmart. As a tax payer I was kind of ****ed off to learn my taxes subsidized Walmats low wages and crappy benefits. So, that $2 off cereal may not be $2 cheaper after all.
Click to expand...

Maryland is trying (or maybe they got it done) to get a law thru requiring
any retailer with over 10,000 employees to spend at least 8% of their
salary cost on health care benefits or pay that 8% to the state for just the
reason you've cited. Gee .. wonder who that's aimed at.

The cost of benefits adds about 25% above their wages to the cost
of each employee for us.
 
RogerT said:
Here's what we pay for some common brands from our wholesaler:

Cheerios

47.46 per case which is 3.39 per unit. We retail it at $2.50 to 3.65
(we operate warehouse stores and conventionals in different areas)

Wheaties

48.75 per case which is 3.48 per unit. We retail it at 2.48 to 3.58

Kelloggs Corn Pops

42.41 per case which is 3.03 per unit. We retail it at 2.50 to 3.59

Now these are catalog cost and don't include freight. But the case
costs are probably pretty close anywhere in the country.
Click to expand...

Hey Roger, I have heard that the grocery business isn't quite so simple as that. Tell me I'm wrong, but that doesn't also include some of the weird money games that go one between grocery stores and the distributors, hold backs, advertising money, end-cap space and so on.

So that's not the "true-cost" either.

Besides, I live in a major metropolitan area and Wallymart isn't going to drive anyone out, even with predatory pricing.

I also cannot beleive that union vs. non-union wages explain the often 100% markup difference between Walmart and the large and small grocery stores around here. Seeing that a perfectly good store brand retails for nearly a 1/4 of the price, something is way out of kilter.
 
RogerT said:
Here's what we pay for some common brands from our wholesaler:

Cheerios

47.46 per case which is 3.39 per unit. We retail it at $2.50 to 3.65
(we operate warehouse stores and conventionals in different areas)

Wheaties

48.75 per case which is 3.48 per unit. We retail it at 2.48 to 3.58

Kelloggs Corn Pops

42.41 per case which is 3.03 per unit. We retail it at 2.50 to 3.59

Now these are catalog cost and don't include freight. But the case
costs are probably pretty close anywhere in the country.

Get me the UPC code off the box and I'll tell you what the wholesale
cost is from our supplier.

Now a certain LARGE retailer (I don't want to point fingers) that is
gradually taking over all of retailing engages in a lot of predatory
pricing. They'll sell lots of stuff at way less than cost to put other
retailers out of business in an area. This does a couple things .. eliminates
the competition for both sales and labor. If there's no where else to shop
or work then they can charge what they want .. and pay their help
poverty wages with no benefits. Check their pricing in different
markets .. one with competition and one where they've shut down
the local operators.
Click to expand...

isn't that illegal?
 
larrysb said:
Hey Roger, I have heard that the grocery business isn't quite so simple as that. Tell me I'm wrong, but that doesn't also include some of the weird money games that go one between grocery stores and the distributors, hold backs, advertising money, end-cap space and so on.
Click to expand...

There's a lot of deals and street money out there. The retailer doesn't
see a bunch of it. Things like "slotting allowances" (bribes to put an item
into a warehouse) go to the wholesaler. There are things like allowances
per case on items that generally get passes on to the customer. That's
those "Temporary Price Reductions" you see on the shelf. So if a vendor
gives us $1.20 off on the cost of a 12 pack case we take a dime off
the retail and make a TPR.

[/QUOTE]
Besides, I live in a major metropolitan area and Wallymart isn't going to drive anyone out, even with predatory pricing.[/QUOTE]

Probably not.

[/QUOTE]
I also cannot beleive that union vs. non-union wages explain the often 100% markup difference between Walmart and the large and small grocery stores around here. Seeing that a perfectly good store brand retails for nearly a 1/4 of the price, something is way out of kilter.[/QUOTE]

Wages is the single biggest expense in a supermarket. Average might be
10% of sales. A supermarket doing everything right will put 1/2 to 1% net
on the bottom line. That's out of a 20% average gross profit. Operationally
we can only control three things: labor, supplies, and to a very small
extent the gross profit (depending on our ability to control shrink & sell
more profitable items). A very small change in labor expense can be the
difference between a profitable and unprofitable store.

As for WalMart there are many things that affect the cost of putting
product on the shelf for them. They operate their own supply chain and
are able to move product thru it at a lower cost than us mere mortals. We
can't duplicate that. They have a huge leverage over the suppliers and
can dictate what they're going to pay for stuff. They also use the grocery
side as a traffic draw to get people in to buy the more profitable general
merchandise.

It's a very complicated business. I've been in it for 40 years and have
ran stores, owned a store, currently as CIO and on the Executive Committee
for a regional chain. It's fascinating and I learn new stuff daily. It's fun.
 
Roger -

Did I mis-read something, or did I see that you sell cereal at a loss?
 
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