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Cereal War Escalates As General Mills Trims Prices Company Cuts Cost Of Some Brands, Increases Box Size On Others

Associated Press

Cereal eaters will soon be getting more bang for their buck.

General Mills, which began a breakfast cereal price war when it cut prices two years ago, announced Wednesday that it will either cut prices or package bigger boxes for the same price on 20 other brands.

In early July, the price on 12 brands, including Cocoa Puffs, Trix, Lucky Charms and 24-ounce boxes of Total Raisin Bran, will be cut by an average of 11 percent.

The package size on seven other brands will increase in August, at no increase in price, so customers will get an average of 11 percent more cereal.

Prices for regular Cheerios and Wheaties are not affected by the latest cuts. General Mills cut prices on those brands in April 1994, when it started the cereal war.

The new round of cuts by the nation’s No. 2 cereal maker follows moves this year to lower prices by rivals No. 1 Kellogg and No. 3 Post.

Kellogg, the maker of Frosted Flakes, Frosted Mini-Wheats and Froot Loops, last week announced it was cutting prices on 16 brands by an average of 19 percent. Post announced its price cuts, averaging 20 percent on brands including Spoon Size Shredded Wheat and Raisin Bran, in April.

Stephen Sanger, General Mills’ chairman and chief executive officer, said Wednesday that the latest price cuts would reduce sales for fiscal 1997 by 4 percent, or about $100 million.

He said a planned reduction in marketing expenses and greater productivity would offset much of the price cuts, but would lower earnings by $30 million to $35 million.

“We believe the long-term benefits of these actions far outweigh their costs,” Sanger said.

Brands on which General Mills is cutting prices also include Cinnamon Toast Crunch, Berry Berry Kix, Monsters, Reeses, Honey Nut Cheerios, Apple Cinnamon Cheerios, Frosted Cheerios and twin packs.

The company is increasing the package sizes while keeping prices steady for Total Raisin Bran that now contain 18 ounces, Golden Grahams, Basic Four, Honey Nut Clusters, Oatmeal Crisp with Raisins, Oatmeal Crisp with Almonds and Oatmeal Crisp with Apples.