Cereal has been breakfast for generations.
It is a quick and easy breakfast that kids can get for themselves without any help from their parents.
Not only has the price of cereal changed over the years, but so has the makeup of cereal.
This article gives you some insight into the increases you see in the price of cereal.
Why Is Cereal So Expensive?
1. Healthy Ingredients
There was once a time when cereal was laden with sugar, and there was not much that qualified as nutritious in a box of cereal.
Sure, manufacturers fortified the cereal with iron and minerals that parents would feel good about their kids having.
They tried to balance the heaping amounts of sugar in their cereal.
Today, the cereal game has changed.
The manufacturer has taken ingredients up several notches and even made them healthier.
Those healthy ingredients come at a substantial cost to you.
One of the top cereal companies, General Mills, is trying to knock their ingredients out of the park.
They are including dried cherries, maple berries, pumpkin seeds, and almonds.
This new cereal sounds delicious and is topped off with whole-grain flakes.
It even has coconut oil in it, which catches the eye of many health enthusiasts.
The catch is this particular cereal is double the cost of most boxes of cereal on the shelves.
It is going to cost you around $13 per box.
The cereal companies feel that their premium ingredients deserve a premium price tag.
2. Higher Demand For Goods
The past year has been challenging for people across the world in many ways.
There have been so many challenges, they are too numerous to list here.
One of the challenges, however, was the sudden difficulty in finding items.
It started with toilet paper, paper towels, and then hand sanitizer and sanitizing wipes.
For months, these items needed to be rationed.
People found themselves stalking delivery trucks to be the lucky ones this time.
Every time you visited the grocery store, you were not sure what item was going to be in short supply that week.
It changed often.
Suddenly, you were not able to find an item on the shelves and would go months before you could find it again.
The pandemic has caused companies to change the way they respond to demand.
The pandemic caused confusion, panic, and worry, which led to shortages on a large scale.
In addition, the spending habits of people changed.
They were no longer spending money eating out and quickly shifted to items they needed in their homes.
The pandemic caused pressure on manufacturers in ways they had never seen before.
The pandemic impacted every supply chain, and the prices rose as a result.
While cereal was not in short supply, the companies that manufacture it were impacted in various ways, all of which caused an increase in the price of your favorite cereal.
3. Advertising and Marketing
There is a lot of cereal on the market.
They have to rely heavily on advertising, marketing, and brand recognition.
That is how they sell more cereal.
Creating brand recognition is an expensive undertaking.
It is one that constantly must be revamped.
Even if the branding remains the same, it usually requires upgrades.
When you see a cereal, you can immediately think of their logo or the famous character that represents them.
You associate those things with the cereal.
This is because of their advertising.
Then there are the commercials for the cereal.
Their advertising plan requires a large budget passed directly to the consumer at the check-out.
Cereals tap into your nostalgia.
When a manufacturer can create a nostalgic feeling within you, you are more willing to spend money on that item.
They excel at creating messaging that reminds you of positive memories from 20 years ago.
Not only that, but the cereal box itself is bright and enticing.
Think of the bright colors and happy symbols that are used on cereal boxes.
The bright colors are all designed to get and keep your attention.
They create characters that you bond with over time.
Think of a certain tiger or rabbit that has been characterized in commercials.
We feel like they are our friends.
This feeling makes us want to buy their cereal.
4. Prizes In The Boxes
You cannot possibly forget the toys in the cereal boxes.
Many people have bought a particular box of cereal only for the toy inside.
In the beginning, the toys were cheap little things that were kind of silly.
It did not matter, though, because every kid wanted them.
Now, the toys and prizes are out of control, as is the cost associated with them.
These costs are passed on to the consumer.
You are paying for that “free” toy prize in your cereal box.
The toys have grown up right along with you.
You are not going to find many toys inside the box anymore.
Part of this was because they were a choking hazard.
More importantly, it is because kids are not into those toys the same way they used to be.
They had to go back to their creative think tanks, which cost money, to come up with some new ideas.
Now, you can find access codes to redeem online for rewards or prizes.
You will see things like movie tickets or music downloads.
5. Free Market Pricing
We have a free market, and while that means that there is no governmental control over the prices you pay at the store for any items, including cereal, it also means that there is no control over pricing.
Usually, prices are held at a certain amount because of competition.
There are many stores within miles of each other, and they have to be competitive in their pricing, or no one will buy from them.
Cereal seems to be an exception to that.
Cereal prices are vastly different from store to store.
Some people will go to different stores for specific items because they know they can find them cheaper somewhere else.
Other people are going to buy all of their items in one place because they do not want to go to multiple stores.
The latter group falls prey to whatever price the store wants to charge for their goods.
Cereal companies allow the stores in which their cereal is sold to set their price.
They do not control what price the store charges.
Cereal is an expensive item.
The stores continue to raise the prices because consumers continue to pay the price.
Stores in the same city can have a $3 or more difference in the cost of the cereal.
If you are willing to check the prices across several stores and always shop at the one where it is the least expensive, then you may still pay a lot for cereal, just not as much.
6. Decreased Demand For Cereal
Supply and demand is a huge factor in the cost of your cereal.
Cereal is not what it used to be.
There was a ton when it was drenched in sugar, dyes, and preservatives.
Companies have cleaned up their cereal a bit and changed the taste along the way.
The cereal is not how we remember it from our childhood, and we are less willing to buy it.
The better ingredients combined with less desire to purchase have caused the prices to increase.
People are changing their diets today.
They are more focused on healthy foods and better eating.
We have learned a great deal about refined sugar and carbohydrates over the years.
As a result, many people are leaving cereal behind for healthier options at the breakfast table.
This change in diet has decreased the demand for cereal, which means less is sold, and less money is put in the pockets of the manufacturers.
To cover the losses, the companies are raising the prices.
If they can only sell six boxes of cereal and not 10, they are going to increase the price to cover those losses.
People are busier today and often on the go.
They need food, especially breakfast food, that will move with them.
People no longer have the time to sit down for a huge breakfast in the morning.
Cereal is not that portable.
If you want to eat it dry, you can find it in to-go cups.
If you like your cereal with milk, there is no way you can drive and eat that, so the demand for cereal continues to go down, and the prices continue to go up.
7. Climate Change
This may sound like an odd reason for your cereal prices to go up, but climate change has a huge impact on the supply chain.
There are many indirect impacts of the changing climate that most people ignore because they do not see the correlation to rising costs.
Three of the critical ingredients in most cereal brands are rice, corn, and wheat.
Temperatures are rising in most areas, and this has caused crop production to go down.
When production goes down, there is less for farmers to sell.
Decreased production means a potential loss of income.
Many farmers cannot afford a reduction in their income.
The result is they raise their prices on these goods.
The manufacturers pay more, and then you pay more.
A study was completed that showed if something does not happen to stop the harm we are doing to the environment, climate change will continue to happen, and it can potentially cause a 20 percent increase in price to some cereals by 2030.
As these crops become scarcer, the farmers are going to have to continue to raise prices.
Farmers also have to take steps to protect their crops which may cost more money.
These costs are passed along to the manufacturer when the crop is sold.
The projection is that the cost of rice, corn, and wheat will double by the year 2030.
8. Price Of Oil
Oil is critical for all goods and services, including cereal production.
The price of oil is going up at a constant rate every day.
You most likely do not consider how much other items, like oil, are used in the production of cereal.
There are factories and mills that run constantly to create cereal out of the rice, wheat, and corn bought from the farmers.
These factories require oil to run.
There are production lines that run to make the cereal you eat every day.
These lines require oil.
Once the cereal is completely manufactured, it must be boxed.
Most likely, those boxes are not made in the same place as the cereal, so they must be shipped.
This requires oil.
Once the cereal is boxed up and ready, it has to be shipped to the store for sale.
You guessed it, this requires oil, too.
Oil is a key component and just about every step of manufacturing cereal.
As the oil prices rise, it causes an increase in cost at every step.
That increased cost is passed directly to the consumer with the price you pay at the store.
9. Celebrity Appearances
Many cereal brands have a spokesperson advertising them.
You often see these people in the commercials.
Sometimes, these are actors pretending to be regular people moving through their everyday lives.
In other cases, cereal companies use celebrities for advertising their cereal.
Depending on their market, they will bring on a celebrity who is popular with that market.
There is a cost associated with this.
The celebrity is not donating their time or appearing in a commercial because they thought it would be fun.
They are getting paid to do it.
Every time you buy that cereal, you are paying a percentage of that celebrity’s salary.
It may be a small percentage, but a percentage, nonetheless.
Any decision that a cereal company makes is most likely paid for by the consumer of the cereal.
Anytime the cereal company is spending money, those costs are passed along to you when you buy it.
Many people are opting out of cereal for this reason.
They do not like the expensive pricing on cereal or how the cereal companies determine the cost.
They have decided not to eat cereal anymore.
10. Controls Over Distribution
Cereal companies know what they are doing when they manufacture, package, distribute, and advertise their cereal.
They want to make money, and make the money they do.
There are only a handful of large cereal companies, and they are in control.
They control all the channels of distribution to the stores.
This control allows them to limit the competition and choose the price the cereal is going to sell for.
Another way the cereal companies can ding you with the price is by reducing the size of the box.
The cereal company may opt to keep the price the same but slowly begin to shrink the box size.
They do it slowly, so you do not notice until it is too late.
For example, the box size may have started at 16 ounces, and then, it is moved to 15.5 ounces.
You do not notice because a half-ounce reduction in a box is so minor, you do not even catch it.
They continue to reduce the size until that box has been reduced to 12 ounces without you even realizing it.
The price also stays the same or, in some cases, increases.
This box reduction strategy is one they employ over the years.
You are not going to see it happen from one week to the next because you may notice that.
You will see it over the course of a year or two, and the next thing you know, you are getting several fewer bowls of cereal from one box while paying the same price.
It is ingenious and underhanded all at the same time.