Inflation and the demand for breakfast cereal; packaging’s effect on demand
According to “Pricing the Cereal Aisle—Understanding how consumers react to inflation,” a study by consumer insights platform Veylinx, the impact of price increases on demand for the two most popular U.S. cereal brands, Cheerios and Frosted Flakes, shows that even though the majority of consumers are concerned about the impact of inflation on their daily lives, they are willing to absorb rising prices when it comes to cereal. Relatively small price increases have little effect on demand for these breakfast staples.
For example, the study found that when prices rise by 20 cents (from $3.29 to $3.49), demand for Frosted Flakes is virtually unchanged and demand for Cheerios drops by only 1.5%. Larger price increases do have a more significant effect on demand: a 50-cent price increase reduces demand for both brands by almost 13%.