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Days after the CEO of Kellogg’s
KLG,
suggested that inflation-weary families should eat cereal for dinner, some outraged consumers pointed out that the cereal and snack company had raised its own prices in recent years and called for a three-month boycott of Kellogg’s products.
The boycott, proposed on TikTok, would run from April 1 to June 30 and calls for customers to purchase products from other companies in order to send Kellogg’s a message during the second quarter of its fiscal year. They’re also demanding that Kellogg’s lower its prices.
“There’s no reason for you to jack up your prices the way you did, except to screw us,” one TikTok user said in a video with 2 million views and more than 300,000 likes, and counting, as of Friday. “And you know what? Now we’re going to screw you — while eating some other brand’s cereal.”
“Inflation has continued to rise year over year over year, and they continue to do nothing about it,” added another TikTok user calling to boycott Kellogg’s in a video with more than 655,000 views and 118,000 likes. “First we were told that we drink too much Starbucks. Then it was, stop having so much avocado toast. Now Kellogg’s CEO wants to tell us, ‘Oh, you can’t afford dinner, that’s OK, just buy Frosted Flakes and you’ll be all right.’ Touché there, but I will not be eating Kellogg’s Frosted Flakes.”
WK Kellogg Co. CEO Gary Pilnick made the comments that inspired the protests in an interview with CNBC last week.
“The cereal category has always been quite affordable, and it tends to be a great destination when consumers are under pressure,” Pilnick said. “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 fruit is less than a dollar, he estimated.
Consumer advocates, however, noted that Kellogg’s is among the companies that have raised prices in the past two years, helping fuel higher-than-normal inflation.
‘Families should not have to make these kinds of choices’
“Kellogg’s CEO found an angle to exploit an industry-driven food-insecurity crisis to bulk up his company’s profits, but everyday families should not have to make these kinds of choices in the first place,” Liz Zelnick, the director of the economic security and corporate power program at Accountable.US, a left-leaning consumer advocacy group, said in an email to MarketWatch.
The solution to what Zelnick called price gouging by the food industry is not for consumers to eat Froot Loops every meal, she said, but for Congress to pressure food companies not to raise prices even as they post near-record profits.
The price per unit of Kellogg’s products was up by 17.1% in October compared with the same month a year earlier, the highest increase among ready-to-eat cereal brands, the Minneapolis Star Tribune reported.
A Kellogg’s representative confirmed to MarketWatch that the company’s last major price increase was in March 2023. On the company’s most recent earnings call, Pilnick said, “We are still working our way through that,” implying that the company was still seeing the effects of the 2023 price increase.
Kellogg’s did not respond to a request for comment on Pilnick’s interview and did not immediately respond to a separate request for comment about the boycott.
Kellogg’s has been advertising the idea of cereal for dinner since summer 2022, when the rate of inflation reached a 40-year high.
A 48-box variety pack of Kellogg’s cold breakfast cereal cost $29.26 on Amazon
AMZN,
as of Sunday, compared with around $10 in March 2020, according to the price-tracking website Camelcamelcamel.com. The price of that variety pack peaked at $38 in late 2023. The product listing tracked by Camelcamelcamel.com is sold by Amazon.
Asked during the CNBC interview whether his suggestion could land the wrong way, Pilnick said the idea of cereal for dinner was actually “landing really well right now.” About 25% of Kellogg’s cereal consumption happens outside of breakfast, he added.
“A lot of it is at dinner, and that condition continues to grow,” Pilnick said.
‘High prices at the checkout line is not an accident’
Accountable.US published a report in 2023 arguing that corporate profiteering — the tendency of companies to raise prices while rewarding shareholders and padding profits — is pushing up consumer prices beyond the impact of supply-chain disruptions caused by the pandemic and recent geopolitical tensions. Groundwork Collaborative, a progressive think tank, released a similar report recently that found corporate profits were behind more than half of the inflation seen from April to September 2023.
“High prices at the checkout line is not an accident,” said Rakeen Mabud, the chief economist and managing director of policy and research at Groundwork Collaborative.
Kellogg’s specifically is part of a concentrated cereal market with very few competitors, leaving families without many choices, she added.
That’s one reason prices are still high even as inflation has been coming down, Robert Reich, a former secretary of labor and the co-founder of Inequality Media, said in an email to MarketWatch.
“They can get away with overcharging consumers because they have near-monopoly power — or so few competitors they can easily coordinate price increases,” Reich said.
Some have disputed the “greedflation” narrative. Commentary last month from the libertarian Cato Institute, for example, said that “nonsense on profit-driven inflation” had “dangerous policy implications.”
Nevertheless, U.S. consumers spent a greater share of their income on food in 2022 than they had in 30 years, according to a recent Wall Street Journal report that cited Agriculture Department data.
“‘Telling people that they should resort to cereal for dinner, as these mega-corporations make huge profits off of higher prices on essentials like food, is cruel.’”
The poorest families bear the brunt of higher food prices, Mabud said, because many live in areas where fresh food is hard to come by and spend the highest share of their income on groceries. What those people earn stands in stark contrast to what Pilnick earns, Mabud said.
“Telling people that they should resort to cereal for dinner, as these mega-corporations make huge profits off of higher prices on essentials like food, is cruel,” she added.
Pilnick’s comments show how out of touch corporate executives are with the problems people face, Reich said.
Pilnick received a base salary of about $600,000 for the time he spent last fiscal year serving in his old role before the Kellogg Company, now known as Kellanova, spun off WK Kellogg in October, according to a preliminary proxy filing from Kellanova.
Pilnick’s total compensation there approached $5 million, with about half of that in stock awards, which allow companies to pay their executives based on company performance. WK Kellogg has yet to put out its own preliminary proxy statement showing Pilnick’s pay in his new capacity.
“Do you think he’ll be eating cereal for dinner?” Reich said, referring to Pilnick’s compensation. “I think not.”
How have higher prices affected your life and how you think about the U.S. economy? Let us know at readerstories@marketwatch.com. One of our reporters might reach out to you to learn more.
