With the share of personal income being spent on food at a 30-year high, one CEO has a suggestion to help American families put food on the table: eat cereal for dinner.
Gary Pilnick, CEO of WK Kellogg Co., told CNBC, “When we think about our consumer under pressure, … cereal … has always been quite affordable and it tends to be a great destination when consumers are under pressure.”
He said his company has been focusing on messaging “to reach the consumer where they are, so we’re advertising about cereal for dinner. If you think about the cost of cereal for a family versus what they might otherwise do that’s going to be much more affordable.
“The price of a bowl of cereal with milk and with fruit is less than a dollar so you can imagine where a consumer under pressure might find that to be a good place to go.”
Pilnick said when looking at company data, “breakfast cereal is the number one choice for in home consumption” with over 25% of cereal consumption being outside of breakfast. “Cereal for dinner is something that is probably more on trend now and we would expect to continue as that consumer is under pressure.”
To combat consumer concerns about rising food prices, WK Kellogg CEO Gary Pilnick assures that cereal remains a versatile and affordable breakfast – or dinner – option.”The price of a bowl of cereal with milk and fruit is less than a dollar,” he tells @carlquintanilla. $KLG pic.twitter.com/2WJeMLMnmC— Squawk on the Street (@SquawkStreet) February 21, 2024
He made the suggestion as the Wall Street Journal reported that “it’s been 30 years since food ate up this much of your income,” citing high transportation, fuel, ingredients, services and labor costs all contributing to food manufacturers, grocery stores and restaurants keeping prices up.
“Relief isn’t likely to arrive soon,” the Journal reported. “Restaurant and food company executives said they are still grappling with rising labor costs and some ingredients” are more expensive.
In 1991, American consumers spent 11.4% of their disposable personal income on food – still grappling with the aftermath of record high inflation in the 1970s. “Households were still dealing with steep food-price increases following an inflationary period during the 1970s” when Jimmy Carter was president, the Journal notes.
According to the most recent USDA data, American consumers spent 11.3% of their disposable income on food in 2022.
Food inflation has been evidenced the most by higher prices and smaller portions, otherwise known as shrinkflation, which The Center Square first reported on in 2022. Only recently did President Joe Biden first publicly address shrinkflation by blaming companies.
Pilnick’s call for “cereal for dinner” comes after cereal sales stagnated roughly two years ago, CNBC reported. In 2022, Kellogg announced it was splitting into three companies and rebranding due to economic challenges and other factors. WK Kellogg, Kellogg’s cereal business under a new name, began trading on the New York Stock Exchange last October.
Special K, Froot Loops and Rice Krispies, cereals that provided “a foundation of Kellogg” for decades, “are no longer seen as key growth drivers for the company,” CNBC reported. “The pandemic briefly revived the cereal category as more consumers ate breakfast at home, but Kellogg expects flat revenue growth for its North American cereal business in the future.”
Kellogg also went through an 11-week strike at four cereal plants in 2011 as profit margins increased. Now, the company is actively promoting “equity, diversity and inclusion” hiring policies and “advocating for sustainable and equitable access to foods.”
It’s stated goal on its website is to implement “gender 50/50 parity at the management level by the end of 2025 and 25% People of Color in the U.S.”
The move to promote cereal for dinner may also be another indicator confirming economists’ warnings: a recession is on the way. Pointing to the latest jobs report, they say more people are working part-time jobs and multiple part-time jobs to make ends meet.
The majority of consumer spending is due to credit card debt with some interest rates reaching over 35%, economists note. As consumer credit card and auto loan delinquencies increase, major companies have also already begun layoffs, with the tech industry showing signs of trouble. Former CEO of Home Depot and Chrysler Bob Nardell warned more layoffs were coming because high-interest rates are “killing” middle and lower-market companies.
Companies that weathered COVID-era lockdowns couldn’t survive high inflation and high interest rates, with major chains announcing in the past year bankruptcies, store closures and layoffs.
The Federal Reserve is expected to cut interest rates next month. However, some argue the damage has already been done and Americans could still suffer the repercussions of a Biden economy for decades as they did after the financial woes of the Carter administration.
