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Kellogg shrinks cereal boxes, not prices

June 18, 2008|From the Associated Press

GRAND RAPIDS, MICH. — It's a little less cereal for the same amount of money.

Kellogg Co. is using smaller packaging while charging the same prices for five brands of its cereals sold in the United States, effectively raising their prices for the second time this year. The company started shipping the new boxes to stores this month.

Boxes were reduced by an average of 2.4 ounces for 14 items sold under the Apple Jacks, Cocoa Krispies, Corn Pops, Froot Loops and Honey Smacks brands, Kellogg spokeswoman Susanne Norwitz said.

"This price adjustment on select ready-to-eat cereal brands was taken to offset rising commodity costs for ingredients and energy used to manufacture and distribute these products," Norwitz said.

Battle Creek, Mich.-based Kellogg increased prices in January in the low-single-digit range, on a percentage basis, to offset higher costs, the Battle Creek Enquirer reported Tuesday. The company's first-quarter profit still fell 2% compared with the year-earlier period.

The net result of the smaller boxes is a similar price increase, Norwitz said.

She declined to say whether the company would shrink the boxes of other cereals.

"We did an extensive analysis of all of our brands to determine what made the most sense for our business," Norwitz said.

Kellogg shares fell 82 cents to $50.67 on Tuesday.

About a year ago, rival General Mills Inc., maker of Cheerios and Wheaties cereals, started selling its cereals in smaller boxes at similar prices.

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