Kellogg Co. announced price cuts Monday averaging 19 percent on popular cereal brands like Frosted Flakes and Froot Loops following moves by a competitor earlier this year that slashed prices on many brands.
"It responds mainly to consumer expectations," Kellogg Chairman Arnold Langbo said.The price cuts, which Langbo said should show up on U.S. store shelves in a couple of weeks, include 27 percent on Froot Loops; 22 percent on Frosted Mini-Wheats; and 18 percent on Frosted Flakes. The cuts affect 16 Kellogg products, about two-thirds of its U.S. cereal business, Langbo said.
Earlier this year, Philip Morris Cos. cut prices on its Post and Nabisco brand cereals in an effort to boost market share in the $9 billion industry.
The typical box of cereal cost about $4, and the Post cuts averaged around 20 percent.
Langbo said the Kellogg price reductions can be done because of two years of corporate cost-cutting, including eliminating 1,200 jobs last year. The cereal maker held most prices steady for 30 months, Langbo said.
"We're now in a position to be able to pass these savings along," Langbo said.
Coupons, which many manufacturers have complained cost more to design and distribute than they are worth, will continue to be a part of Kellogg's business, he said.