April 20, 2024

Kellogg’s CEO Gary Pilnick thought he’d capitalize on the moment (Americans struggling with persistent inflation) to do the thing Kellogg’s does best: advertise cereal.

“We’ve got to reach the consumer where they are,” Pilnick said in reference to the company’s “cereal for dinner” campaign during an interview with CNBC last week. The ad campaign started last year, but Pilnick’s comments sparked newfound rage in consumers, who have taken to social media platforms en masse to vent their frustration.

WK Kellogg CEO Gary Pilnick: ‘Cereal for dinner’ is trending for consumers under price pressure

“There is a serious difference between ‘I’m tired; all I have the energy for is a bowl of cereal,’ versus ‘Americans are in a dire situation right now financially; let’s profit off of it,’” said one TikToker.

Kellogg’s has repeatedly hiked prices in the last couple of years — even more so than other brands. The company’s average price per unit (box of cereal) was up 17% at the end of 2023, while General Mills, Quaker, and store brand prices were up 12%, according to data compiled by the Star Tribune. That paid off for Kellogg’s, and its profits rose 540% in 2023 (pdf).

Pilnick thought his comments would be well received. A CNBC reporter deliberately asked him if he thought there was “a potential for that to land the wrong way.” Pilnick confidently responded, “We don’t think so. In fact, it’s landing really well right now.” Kellogg’s didn’t immediately respond to Quartz’s request to respond to the social media backlash.

Pilnick has a point, somewhere in there

While consumers’ frustration with companies using inflation to boost profits is well-founded. But Pilnick is correct in his view that cereal is an easier grocery item for consumers to afford than others. The cost of cereal was down 0.6% in January from last year, while grocery store prices overall are up 1.2%.

But Kellogg’s might not be the cereal choice for consumers looking to save a few bucks, since it’s pricier than its competitors. “Gotta come in a giant store brand bag for it to be cost effective,” said one Reddit user.

Even as inflation for “food at home” (or food bought in grocery stores) has eased more than other categories, supermarket prices are still up 25% from before the pandemic.

By the numbers

$110 million: Kellogg’s 2023 profits, a 540% increase from the previous year.

25%: How much grocery prices have increased since 2019. Meanwhile, prices overall are 19% higher than before the pandemic.

3.1%: Inflation in January. Food inflation was lower at 2.6% (including food eaten at restaurants and bought at supermarkets), and cereal prices actually declined 0.6%

$1 million: Gary Pilnick’s base salary, which added fuel to critics’ fire.

17%: How much Kellogg’s increased prices between November 2022 and 2023.

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