RTE Breakfast Cereal Industry in 1994

Reason for the high-profitability of the RTE cereal business: The "Big Three" cereal manufacturers have jointly monopolized the market and have reaped high profits from their monopoly pricing combined with the tacit co-ordination they share regarding price hikes. The "Big Three" have backed up their monopoly strategy with their strong relationships with each other and with regional and national grocers. This relationship allowed them to control or buy shelf space and ideal positioning of their …

…the branded product. The private labels could be named differently or sold to grocery chains and can be marketed under their trade name. This will also help the "Big Three" to send a strong signal to the small producers, which seem to be gaining in strength (For Eg: Malt-O-Meal with its plant expansion and growing presence) and attack their market territory. This will also prevent them from "trading up" to manufacture their own branded cereals.