A new report sheds light on just how much consumers are willing to pay for their favorite cereals in the current inflationary environment.
Veylinx, a consumer insights platform that uses behavioral research to predict purchasing habits, studied the impact of price increases on demand for Cheerios and Frosted Flakes. The study found that 84% of consumers are concerned about the impact of inflation on their daily lives.
However, they are willing to absorb rising prices when it comes to the popular breakfast staple.
HOW MUCH OF AN INCREASE ARE CONSUMERS WILLING TO ABSORB?
Relatively small price increases had a minimal effect on consumers. Demand for Frosted Flakes was virtually unchanged by a 20-cent price increase from $3.29 to $3.49, while demand for Cheerios dropped by just 1.5%.
Pricing of $3.99 was found to be an important psychological threshold, with demand falling sharply above that point. At $4.99, demand again decreased dramatically.
HABITS BY DEMOGRAPHIC
Older consumers (55+) expressed the most worry about inflation—with 89% somewhat or very concerned—but are just as likely to absorb price increases as younger consumers.
Gen Z consumers are the least worried about inflation (only 71% concerned), which is also reflected in their greater willingness to tolerate rising cereal prices. Other notable findings about Gen Z’s cereal purchasing behavior included:
- 18% eat their cereal with plant-based milk
- 65% eat cereal three or more times per week
- 14% showed a decrease in demand following a $0.70 price rise
ARE CONSUMERS OVERSTATING INTEREST?
An additional finding by Veylinx revealed that consumers consistently overstate their interest and the amount they are willing to pay in traditional surveys versus real purchasing situations. For example, 76% of consumers said they would purchase Frosted Flakes in a resealable bag when surveyed, but when faced with an actual purchase decision, only 39% did.