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Breakfast of champions?

by Geoff Hart

Previously published as: Hart, G.J. 1989. Breakfast of champions. Canadian Forest Service, Sault Ste. Marie, Ont. Staff Newsletter, October:10–11.

As Halloween is soon upon us, I thought this would be a good time for an essay on a topic that Joe Flaherty ([Count Floyd] of the Second City comedy troupe) would describe as "really scary". This particular essay probably belongs in my "little things" series, but after a bit of thought, I decided it deserved some space of its own. The other night, I was watching 60 Minutes, and Andy Rooney, their editorial columnist, described the results of a survey of breakfast cereals that he conducted. The results were astonishing, and made me think back to a few other related things I'd read. For your entertainment and astonishment, here are the results, as confirmed by a little research I did on my own in a local A&P [a large local grocery chain].

There were nearly 100 brands of breakfast cereals available on the shelves, excluding the broad variety of sizes that come with each brand name but including the various "flavors" that come with each cereal. (More on this presently.) In fact, apart from the meat and produce sections, there is no other product that accounts for as much shelf space in the average supermarket. If one follows the latest trends in medical advice on diet, this is not surprising, as we are now being advised that breakfast and lunch should be the largest meals of the day, followed by a small dinner. (The old lore for this was reflected in the phrase "Break your fast like a king, eat a prince's lunch, and sup like a pauper.") As cereals and breakfast go together like pancakes and maple syrup, I suppose we shouldn't be too surprised to see how many cereals there are.

What is disturbing is that there are, at present, something like a half dozen cereal companies that dominate the market, and one way that they maintain this dominance is by what's called "niche saturation". Niche saturation involves filling so much shelf space with your company's products that there is no room left for anyone else's products. This goal is attained by coming up with as many variants as possible on the same basic recipe, packaging these variants in a multitude of different package sizes, and advertising each variant to an embarrassing extent. Of course, offering the "family-size package" helps, because even though this often (but by no means always) offers the best buy for your money, it also takes up the most shelf space. The end result is that very few new companies have any hope of penetrating this market, and the few companies currently in the market maintain their near-monopoly.

By the way, did you ever wonder why it is that cereals are packed by weight and not by volume? The official and plausible reason is that this ensures that everyone gets the same weight of cereal for their purchase price. The unofficial reason is that after the contents of the package settle ("shrinkage"), you have a huge package with relatively little cereal in it. Market studies have shown that most shoppers pick up the largest package and pay little attention to the weight marked on the package. Did you ever notice how small the letters are that indicate the package weight? This isn't a coincidence.

Obviously, the only way the cereal companies can afford to support so many brands is to persuade you to select their brands over those of their competitors. As mentioned above, advertising is one of their strategies. Thinking back to my mis-spent childhood watching Saturday-morning cartoons, the only commercials that I can remember clearly are those for the various sugar-loaded breakfast cereals. (Frightening what TV will do to a young mind, isn't it? If you don't want your kid to grow up as an essayist, unplug the family TV now!) The cereal companies also do their best to come up with new and original contests to entice you to try their cereal; the kiddy equivalent is to stick tacky little plastic prizes into the package. As far as the contests go, you would probably do better to purchase tickets for the weekly provincial lottery, as the odds against winning are only 10 million to one against you. By contrast, if only 5% percent of the North American population buys Rice Krispies and enters the latest contest, that means about 14 million entries (against your one lone chance of winning) for the average North America-wide contest. Per draw, and expressed as the value of prize per dollar spent to enter the contest, the lottery tickets are the better buy. And speaking of price, here's the most outrageous scam yet: the little plastic prizes (or stickers, or crayons, or etc.) offered to entice your children typically cost less to manufacture than the cost of the cereal they displace in the box.

It gets worse. In Andy Rooney's little speech, he quoted some fairly unbelievable product prices for the cereals, and although I had heard what he was saying before, I decided to check this for myself. Simply speaking, what I did was to sample (unscientifically and quickly) the price per gram for a range of cereals at the A&P. For comparative purposes, I selected meat products, as these are typically considered to be the most expensive part of one's purchases at most supermarkets. I started with the expectation that the cereals would be the cheapest products, far less expensive than a luxury product such as meat, but the results were eye-opening:

Cereal prices ranged from $4.40 to $11.00 per kilogram (kg).
By contrast, meats cost from $4.83 per kg (for lean ground beef) to $11.00 per kg (for sirloin-tip steaks). It was a relief to note that top sirloin cuts ($12.99 per kg) and veal loin cuts ($19.82 per kg) were actually more expensive than simple wheat and corn cereals.

I've read thatit takes something like 20 pounds of corn to feed a cow well enough to produce one pound of beef. (You can come up with a much better estimate by asking a farmer, but in my traditional manner, I'll "chicken" out and use an easy number to work with.) Is one pound of beef (meat in general) 20 times as expensive as the same amount of cereal? In the case of the most expensive meat I found, the price differential was at most four times; for lean ground beef, the most expensive cereal actually cost twice as much as this cheapest meat. I suspect that this result has to do with the relative amount of advertising expenditures on each product, not to mention the fact that there is much less competition in the meat market as a result of the various meat marketing boards. [Of course, there are also grain marketing boards, so perhaps it's just the advertising.]

Of course, if you really want to shock yourself, consult the financial section of any good newspaper and calculate the wholesale cost of meats and cereals (per gram) from the figures listed in the commodities section of the stock market reports. As I shock rather easily, I won't do this calculation myself. Now compare the markup in price between what you pay for your processed beef and your processed cereals. Let me hasten to assure you that the miscellaneous costs associated with raising livestock outweigh the costs of growing wheat by a considerable margin. Again, we're left with the conclusion that the marketing costs are what drive the prices up.

If you live near a good bulk food store, you'll find that you can save enormous amounts of money by purchasing generic cereals in bulk. More to the point, you won't be financing one of the biggest money-making scams since the federal government discovered how much it liked taxation. Pass the granola, please.