CEREAL KILLERS

November 18, 2013 by  
Filed under Blogs

THE GROCERY STORE — Only two products can fill an entire aisle: beer and breakfast cereals. I gave up counting the various brands of the latter: Raisin Nut Bran, Cinnamon Crunch, Cinnamon Toast Crunch, 12 different kinds of Cheerios, Snap, Crackle and Pop. The average American spends about 13 minutes a day preparing and eating breakfast, and a lot of that is cereal. Do you eat cereal for breakfast, or feed it to your children, spouse, homeless former Astro? Quite probably you do. According to IRI Builders Panel data, the breakfast cereal market has a cold cereal household penetration rate of 91.6 percent and a hot cereal household penetration rate of 61.8 percent. That’s pretty penetrating.

Here’s an interesting point: cereal is relatively cheap, so when the Great Recession hit America, cereal sales went up. Now that the economy is getting better, at least for hedge fund managers and energy company CEOs, more people are returning to breakfast at cafes and to-go spots, choosing eggs benedict and bacon-with-crab-cakes. So cereal sales are stagnant, and the industry is turning some of its ads towards adults.

As you probably know, James Caleb Jackson is considered the father of flakes. He hatched a cereal called granula in 1863. It was dreadful and had to be soaked in water overnight to be soft enough to chew. George H. Hoyt came up with Wheatena about 1879 and put it in boxes, which made his product a lot easier to handle than shoveling it out of a bag. Cornflakes were created by soon-to-be-rich John Harvey Kellogg, a physician, who worked at a sanitarium — a health spa not an asylum. It was run by Seventh Day Adventists at their headquarters in Battle Creek, Mich. which ever since has been “The Cereal Capitol of the World.” The locals preferred Capitol to Capital and the Battle Creek City Council even voted to make that word official. Eventually there were 40 cereal companies in the town.

Charles Post developed Grape-Nut Flakes and Post Toasties in Battle Creek, that made him millions. Post, who had dabbled in Fort Worth real estate, then bought 225,000 acres on the Texas plains and set up a complete town called Post City, now Post, Texas. It was so dry out there that he spent thousands trying to create rain by firing four-pound dynamite charges off the Caprock every four minutes over several hours. It didn’t work. By 1924 General Mills entered the picture with Wheaties. These are still the giants of the industry.

Here is yet another shelf of cereals. Not only do they beckon children with pretty packages but they teach spelling, too: Froot Loops, Rice Krispies, Choc Fruity Dyno-Bites, Krave, Craklin’, Chex and Trix. This box teaches both bad spelling and breaking the law: Cap’n Crunch. His uniform shows him to be a fraud. Crunch is a commander, not a captain. The Wall Street Journal in jest reported that the U.S. Navy had no record of Crunch and that the NCIS was investigating him for impersonating a naval officer. These are just the cold cereals. Across the aisle are just as many cereals to be served hot: Cream of Wheat, Quaker Oats, etc.

Almost from the beginning the industry advertised heavily. Today the breakfast cereal ads are second only to automobiles. Originally the cereal makers pitched to adults, then to children and now, as we see above, it is turning some effort towards adults again. That explains Bear Naked Fit. But kids are still a major market. Have you ever checked children’s TV shows on weekend mornings? Tony the Tiger rules. In 2007, the average American child viewed 757 cereal ads on TV, and 98 percent of these ads promoted unhealthy cereals that would be banned from advertising to children in Britain. Some cereal companies put their brands on the bottom shelves in grocery stores so that small children can spot them. “Mommy, please can we get Choc-Sugar Honey Tarts and Tooth Fairy Decay?”

Incidentally, one story had it that Kellogg was in the horse feed business and when Americans turned to cars, he changed his horse feed to breakfast cereal, but apparently that was just an ugly rumor started by horses. Also, some economists have determined that the breakfast industry spends more on the cereal box than its contents. The manufacturers do spend a lot on paper, ink and paying sports stars who dominate the packaging (“Breakfast of Champions”), but the continuing change in international prices in corn, wheat, rice and sugar — lots of sugar — plus paying the peasants in Ethiopia to harvest them, makes it hard to compare. Still, those are good stories.

Every now and then some goody two-shoes points out that our kids are eating a bunch of junk, but nothing happens. A few years ago there was even a Congressional hearing on the nutritional value of breakfast cereals. An industry nutritionist testified that if you take a bowl of cereal and add milk or cream, some bananas, strawberries, maybe grapes, that was a most nutritional meal. “What if you just consumed the milk and fruit?” a nosey Congressman asked. There was a long silence and I don’t remember the reply, possibly because there wasn’t one.

How profitable is the breakfast cereal biz? One study noted about the early days:  “Combining cheap grains with cheap sugar was like printing money. A 75-cent bushel of grain could now yield 12 dollars worth of cereal.” Today in this country cereals are about $11.5 billion-a-year industry. To keep the bowls filled, the industry is adept at changing. Fiber used to be the fad. Americans couldn’t get enough fiber, so Tony the Tiger changed his stripes. Brans were good. Then the shelves got organic. Next healthy food came into vogue. Guess what?  Wheat and sugar are healthy. Something called Kashi is a hot cold cereal. To combat the to-go craze, now some cereals are to-go. Pass the eggs benedict.

 

Ashby is bowled over at ashby2@comcast.net

 

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