Today, 22 consumer, community, farm, faith, food and hunger organizations sent a letter to the U.S. Federal Trade Commission (FTC) and the 50 state attorneys general urging a full investigation into the recently proposed merger between breakfast cereal manufacturers Post Holdings, Inc. and MOM Brands.
The letter outlines the existing lack of competition in the cereal industry, with the top four firms selling 80 percent of ready-to-eat breakfast cereals in 2014. The proposed merger would make the marketplace even more consolidated, with the four largest firms selling nearly 90 percent of all cereal.
Both companies manufacture private label, or grocery-store brand, generic cereal. The merged company will not only control more than one-sixth of the branded marketplace, it will control a portion of the lowest-cost cereals as well. Both Post and MOM Brands have higher-value, “natural” brands and MOM Brands is a significant manufacturer of discount copycat brands of cereal.
“The cereal aisle is one of the least competitive places in the grocery store,” said Wenonah Hauter, executive director of Food & Water Watch. “This proposed merger would join traditional brands, private label, and discount brands, taking choices away from consumers, especially those who are trying to stretch their grocery dollars by shopping for discount brands.”
The groups point out that the merger could eliminate MOM Brands’ role as an important maverick player in the cereal market. For example, today MOM Brands sells Cocoa Dyno-Bites and Fruity Dyno-Bites that mimic Post’s Cocoa Pebbles and Fruity Pebbles, as well as Honey Buzzers that competes with Post’s Honeycomb. Today, these discount brands provide direct price competitors to the Post brands; after the merger, the firm would be able to unilaterally raise prices on these competing brands.
“This is just the latest in a wave of food mergers that makes our food system less competitive and less affordable for consumers,” said Hauter. “We need the Federal Trade Commission to comprehensively examine the anti-competitive effects of the proposed Post-MOM Brands merger.”
The letter was signed by: Citizens Action Coalition of Indiana; Consumer Federation of America; Equal Exchange; Food & Water Watch; Food and You, LLC; Food Chain Workers Alliance; Hunger Action LA; Hunger Action Network of New York State; Institute for Agriculture and Trade Policy; Iowa Citizens for Community Improvement; Land Stewardship Project; Missouri Rural Crisis Center; National Family Farm Coalition; National Farmers Organization; National Farmers Union; National Sustainable Agriculture Coalition; Organic Farmers’ Agency for Relationship Marketing; Restaurant Opportunities Center United; Rural Advancement Foundation International – USA; TakeAction Minnesota; United Church of Christ Justice and Witness Ministries; WhyHunger.
Contact: Kate Fried, Food & Water Watch, (202) 683-4905, kfried(at)fwwatch(dot)org.