One of my favorite things to eat is breakfast cereal. I have been a cereal eater since I was a kid and have chosen to do my paper on the breakfast cereal industry. The NAICS code is 311320. The SIC code is 2043 Cereal Breakfast Foods. The SIC gives a description of establishments as primarily engaged in manufacturing cereal breakfast foods and related preparations, except breakfast bars. Cereal breakfast foods include: coffee substitutes made grain, hulled corn, farina, granola (except bars and clusters), hominy grits, infant cereal foods, oatmeal, rolled oats, rice breakfast foods and wheat flakes. History
Breakfast cereal is one of the most popular forms of breakfast in the United States. Just about all of us have had and enjoyed a bowl of cereal in the morning. The breakfast cereal industry is very profitable and has been around a long time. In 2007, the market value for the industry was $11.2 billion (Datamonitor, 2007). The breakfast cereal was first invented in 1863 by Dr. James Caleb Jackson who made the granula. The granula was a hard wheat that had to soak overnight before it could be eaten. Later the popular Corn Flakes was invented and today there are many varieties of cereal to choose from. There were a number of individuals who made various forms of cereal as a diet for its patients of the Sanitarium in Battle Creek, Michigan. The cereals that were made however were not for mass market. Not until 1906 was there a patent for cereal, and Corn Flakes were mass marketed by The Kellogg Company. The Kellogg Company, however, was not the first company to mass market cereal. The first was The Shredded Wheat Company, which sold shredded wheat. The Shredded Wheat Company was sold later to what is now known as Nabisco. Although there were a few companies producing breakfast cereal for consumers, The Kellogg Company was the largest and most productive. Corn Flakes were very popular in American households. Soon after, there were a number of breakfast cereal companies who were producing a number of different cereals for consumers. In the early 1900’s, there were over 100 companies producing breakfast cereal. The Kellogg Company had an initially monopoly, but soon the industry transformed from to a monopolistic competition. Many of the breakfast cereal business went out of business, and by 1947, only 55 firms remained in the market (Price, 2000). Today only 45 firms make up the breakfast cereal market. There are two types of breakfast cereals in this market; the hot breakfast cereal and the ready-to-eat breakfast cereal. According to Datamonitor 2007, the ready-to-eat breakfast cereal dominates market share with an 88% share of the market value. Governmental/Environmental Factors
The primary supplier to the breakfast cereal market is farmers. Farmers supply wheat, corn, oats, rice, eggs and a number of other ingredients that are used to produce breakfast cereals. The government plays a major role in both the quality of the product along with the packaging of the product. Looking at the quality of the cereal produced, the Federal Department of Agriculture plays a major role in what foods can be legally produced in the United States. The Federal Department of Agriculture is an agency within the Public Health Service, which is a part of the Department of Health and Human Services. The Federal Department of Agriculture has a number of different functions, one of which is to ensure that the food we eat is safe and nutritious. There are two major sections in the requirements of food law: health safeguards and economic safeguards. Health safeguards are set up to make sure that certain pesticides, poisons and chemical substances are not included in the food. They also insure that food comes from non-diseased animals along with a few other regulations to insure that the food is safe to eat. Economic safeguards are set up to ensure that the food is not damaged or inferior. Economic...
References: Clauson, A (1997). Economic factors holding down food prices increases. Food
Datamonitor (2007). Breakfast cereal in the United States: Industry profile. Datamonitor.
Com. Retrieved April 10, 2008. www.datamonitor.com.
ElAdmin. A. (2006). Cereal price forecast to rise as demand soars. Foodnavigator-
Federal Trade Commission (1996). FTC negotiates settlement to keep cereal prices
Food Manufacturing Industry Information. CollegeGrad.com. Retrieved April 21, 2008.
Ippolito, P.M. & Mathios, A.D. (1989). A study of the cereal market. Federal Trade
Nevo, A. (2001). Measuring market power in the ready-to-eat cereal industry.
Price, G. (2000). Cereal sales soggy despite price cuts and reduced couponing.
Food Review, 23 21-28.
Reimer, J. (2004). Market conduct in the U.S. ready-to-eat cereal industry. Journal
Of Agricultural & Food Industrial Organization, 2, 1-29.
Spake, A. (2005). Utopia in a cereal bowl. U.S. News and World Report, 139, 46.
Worrell, M. (2007). Grain price hikes squeeze food chain. CnnMoney.com. Retrieved
April 20, 2008 http://money.cnn.com/2007/12/11/smbusiness/grainprices.
Please join StudyMode to read the full document