Food inflation
Food inflation is proving sticky in America. According to the U.S. Department of Agriculture (USDA), food prices increased by 5.8% in 2023 — with food-at-home prices averaging 5% higher than in 2022. For context, the 20-year historical level of retail food price inflation is 2.5% per year.
While food price gains did slow in 2023 compared with 2022 (when food-at-home prices jumped by 11.4%) certain food categories, including cereals and bakery products, continued to register big price increases. USDA data shows the price of cereals and bakery products rose by 8.4% in 2023 — behind only fats and oils (9%) and sugar and sweets (8.7%).
Kellogg’s was among the companies hiking prices last year to strengthen its margins.
However, the firm continues to push a narrative — first introduced in 2022 — around cereal as a low-price meal option for breakfast, lunch or dinner.
In 2022, the company launched an advertising campaign around the slogan: “Give chicken the night off.”
Explaining the premise, Senior Director Brand Marketing Sadie Garcia, said: “Cereal for dinner is a low-prep, low-mess and low-price meal option, so you can spend less time cooking and cleaning and more quality time with your loved ones every week.”
At the time, the company estimated that a single serving of Kellogg's cereal, milk and fruit cost less than $1.
Pilnick remains confident in Kellogg’s data around cereal consumption. He told CNBC: “It turns out that over 25% of our consumption is outside the breakfast occasion. A lot of it is at dinner and that continues to grow, as well as the snacking occasion. Cereal for dinner is something that is probably more on trend now and we would expect that to continue as the consumer is under pressure.”
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Pilnick’s suggestion that Americans satiate their hunger (and protect their wallets) by eating cereal for dinner, instead of pricier but more nutritious options like meat and vegetables, missed the mark with many consumers.
“Anything @KelloggsUS can do to make more money off people during times of crisis,” one X user wrote. “I wonder what their CEO is having for dinner? Smh... Price hiking all day without a care. Shame shame.”
Many news reports and social media users pointed out that Pilnick’s pay package last year included a $1 million base salary and over $4 million in incentive compensation, according to a company filing.
Another X user simply stated: “We live in a world where families have to choose cereal for dinner to save money. Sad.”
Meanwhile, a TikTok clip featuring Pilnick’s interview — which garnered more than 2.4 million views and almost 17,000 comments within 72 hours of publishing — asked the question: “What stage of capitalism is this?”
In response, another TikTok user wrote: “Cereal for dinner is what I did growing up dirt poor in the Appalachian foothills, so the stage of capitalism is ‘real bad,’” while another jabbed: “Instead of ‘stop buying coffee,’ it’s ‘well… did you have cereal for dinner or splurge on a McChicken?’”
In 2023, Kellogg’s reported net sales of $2.76 billion (up from $2.7 billion in 2022) and net income of $110 million (versus a prior year loss of $25 million). The stock is down almost 10% in the past year.
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