Breakfast Cereals: The Extreme Food Industry

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.

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 Record created 2017-04-01, last modified 2018-01-22

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