The Ready-to-Eat Breakfast Cereal Industry

In: Business and Management

Submitted By authenia
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RTE Cereal Case Study

Number of Firms and Market Shares

There were six firms in the industry from 1950 to 1990 represented in the case study. In 1990 private label firms entered the market. The industry grew consistently through the 21st century but, the Big Three, consisting of Kellogg, General Mills, and Nabisco, dominated the market. Kellogg has consistently dominated the market shares in the RTE cereal industry with General Mills and Post following close behind. From 1950 to 1993, Kellogg’s average market share was 40.3, General Mills was second with an average market share of 21.7 and third of the Big Three, Post, had an average market share of 17.4. There were not any significant changes in the market shares from 1960 to 1980. However, in 1990 Post dropped to 11.1, 4.5 less than the value in 1980, General Mills reached 24.4, 4.5 more than the value in 1980, and Kellogg, still leading the pack, decreased to 37.5, 3.4 less than the value in 1980. From 1990 to 1993, there were not any significant changes in the market shares for the Big Three.
There are three other firms listed in the case study that represented the remainder of the market shares. During the same time frame, Quaker had an average market share value of 6.8. Quaker market shares decreased dramatically from 1950 to 1960 but made a steady increase beginning in 1970. Nabisco’s average market share was 5.0. The market shares for Nabisco decreased in 1970 and continued to decrease giving them the lowest shares value in 1993 of 3.1. Ralston started with a very low 3.5 in 1950 and increased over the years but averaged 4.9 during the time frame examined in the case study.

Barriers to Entry

One would think that entering the RTE cereal industry would be difficult due to the costs associated with developing product, packaging, and distribution. However, large economies of scale was proven to…...

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