General Mills will raise cereal prices
MINNEAPOLIS — General Mills Inc. said on Tuesday it would raise cereal prices to match increases by competitors, but investors sent its shares down more than 3 percent, and one analyst downgraded the stock.
General Mills spokesman Tom Forsythe said customers should actually see lower prices per box, but the boxes will be smaller, so the effect is a price increase of a few percent. The new prices go into effect on June 25.
The maker of Wheaties and Lucky Charms has been looking for a way to boost profits on its cereals. It sold as much cereal during its most recent quarter as it did in the same period a year ago, but at lower prices because of promotions. Profits have been squeezed by higher prices for fuel and ingredients such as oats.
"Input costs are definitely a factor" in the price increase, Forsythe said. "Grain and energy costs have increased. Most of our competitors in the cereal category have already raised prices, some months ago."
General Mills competitor Kellogg Co. said in April that it had raised prices by 5 percent based on weight.