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Breakfast Cereals: The Extreme Food Industry

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  • John M. Connor

    (Perdue University)

Abstract

The purpose of my talk today is to review several aspects of the market structure, strategic rivalry, and economic performance of the ready-to-eat cereals industry. To do so, I will at times take a long historical view of the breakfast cereals industry because many of the behaviors we observe today seem to me to be imbedded in habits of business rivalry that were learned many decades ago and yet persist today. My perspective on the RTE breakfast cereals industry is informed by nearly twenty years of research on the economics of the 50 food processing industries, and my yardstick for judging the performance of the cereals industry is the economist's vision of the perfectly competitive market, or some reasonably close approximation to that ideal. The subtitle of my paper accuses the breakfast cereal industry to being an extreme case. Compared to other food manufacturing industries.I think the facts speak for themselves. During the 20th century, ready-to-eat breakfast cereals was the only consumer grain-based product that experienced an increase in per-capita consumption. Since the 1960s, the long-run growth of the cereals industry has been one of the highest if not the highest, among all the food industries. Both the increases in real (volume) growth and increases in prices have been near the top of the range, though growth seems to have faltered in the last year or two.

Suggested Citation

  • John M. Connor, 1996. "Breakfast Cereals: The Extreme Food Industry," Issue Papers 12, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:zwi:ipaper:12
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    File URL: http://www.zwickcenter.uconn.edu/documents/issuepapers/ip12.pdf
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    References listed on IDEAS

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    1. Stanley, Linda R & Tschirhart, John, 1991. "Hedonic Prices for a Nondurable Good: The Case of Breakfast Cereals," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 537-541, August.
    2. Scherer, F M, 1979. "The Welfare Economics of Product Variety: An Application to the Ready-to-Eat Cereals Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 28(2), pages 113-134, December.
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    Cited by:

    1. Golub, Alla A. & Binkley, James K., 2005. "Determinants of household choice of breakfast cereals: healthy or unhealthy?," 2005 Annual meeting, July 24-27, Providence, RI 19181, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Gregory K. Price & John M. Connor, 2003. "Modeling coupon values for ready-to-eat breakfast cereals," Agribusiness, John Wiley & Sons, Ltd., vol. 19(2), pages 223-243.
    3. Reimer Jeffrey J, 2004. "Market Conduct in the U.S. Ready-to-Eat Cereal Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-29, November.
    4. Chidmi, Benaissa & Lopez, Rigoberto A. & Cotterill, Ronald W., 2004. "Vertical Relationships In The Ready-To-Eat Breakfast Cereal Market: A Brand-Supermarket Level Analysis," 2004 Annual meeting, August 1-4, Denver, CO 19916, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Chidmi, Benaissa & Lopez, Rigoberto A. & Cotterill, Ronald W., 2009. "The Retail Service, The Market Power, and the Vertical Relationships in Breakfast Cereals Industry," 2009 Conference, August 16-22, 2009, Beijing, China 51770, International Association of Agricultural Economists.
    6. Baltzer, Kenneth & Baker, Derek & Moller, Anja S., 2005. "The Use of Brands in Food Marketing - Results from a Survey of Danish Food Industry Firms," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24658, European Association of Agricultural Economists.
    7. Chidmi, Benaissa & Lopez, Rigoberto A. & Cotterill, Ronald W., 2005. "A Supermarket-Level Analysis of Demand for Breakfast Cereals: A Random Coefficients Approach," 2005 Annual meeting, July 24-27, Providence, RI 19236, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Connor, John M., 1997. "Couponing As A Horizontal And Vertical Strategy: Theory And Effects," Working Papers 14344, University of Minnesota, The Food Industry Center.

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    Keywords

    Breakfast; cereal; grain;
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