Influx

Nice piece from James Surowiecki in this weeks’ New Yorker on how companies behave in recession. He cites Kellogg as an example of a company that gained ground because of actions taken during the Great Depression.

“In the late nineteen-twenties, two companies—Kellogg and Post—dominated
the market for packaged cereal. It was still a relatively new market:
ready-to-eat cereal had been around for decades, but Americans didn’t
see it as a real alternative to oatmeal or cream of wheat until the
twenties. So, when the Depression hit, no one knew what would happen to
consumer demand. Post did the predictable thing: it reined in expenses
and cut back on advertising. But Kellogg doubled its ad budget, moved
aggressively into radio advertising, and heavily pushed its new cereal,
Rice Krispies. (Snap, Crackle, and Pop first appeared in the thirties.)
By 1933, even as the economy cratered, Kellogg’s profits had risen
almost thirty per cent and it had become what it remains today: the
industry’s dominant player.”

Posted by Ed Cotton