An estimation of consumer benefits from the public campaign to lower cereal prices

Article Abstract:

Millions of cereal foods consumers greatly benefitted from the jawboning campaign of two Congressmen against the overpricing activities of cereal companies. Market researches done by the Information Resources Inc. indicate the steady decline of cereal prices after the 1995 public campaign against overpriced cereals. Increases in private label prices and decreases in the branded label prices narrowed the gap between the two. Price cuts reduced brand price cost margins thereby decreasing the demand for branded label advertising.

Economic aspects

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Jawboning cereal: the campaign to lower cereal prices

Article Abstract:

Jawboning is a technique used by government officials and legislators to force private corporations to make adjustments when prices reach questionable levels. The ready-to-eat cereal industry in the US was forced to lower prices when a group of legislators studied cereal price statistics and revealed to the public the overpricing and monopolizing activities of branded cereal companies. Post cereals was the first company to admit to overpricing. Several companies followed suit as a result of a successful jawboning campaign.

Administration of General Economic Programs, Wage & Price Stabilization, Analysis

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High cereal prices and the prospects for relief by expansion of private label and antitrust enforcement

Article Abstract:

Cereal meals do not necessarily provide good value to consumers since the actual cost of cereals are higher than steak and eggs. Processing these foods are not as expensive as canned foods, and thus, have very marginal production costs. Promotional campaigns, such as those in cut-out coupons provide consumers with a false sense of value. The erroneous statistics used by cereal companies in the anti-trust lawsuit as charged by the State of New York, gives consumers a wrong impression of actual food price index.

Cases, Statistics, Price control, Price regulations

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