Coming soon to a Supermarket near you. Kelloggs smaller boxes, Higher prices.

Cheetham Bell JWT advertising Agency won the Bronze Global Effie award for Kellogg's Special K -- "Drop a Jeans Size Challenge". The Effie Awards (it says here) "honour the most significant achievement in the business of marketing communications: ideas that work." Which is a smart thing for a promotion launched in 2003 .(Kelloggs Official History)

Which is even better news for a company (NYSE:K) that announced Q1 sales growth of 10% and operating profit growth of 9% (2007 sales US$12 Bn.) Results driven by price increases, innovation, and effective brand building - so the Company's Board of Directors announced plans to increase the quarterly dividend by 10% beginning in the third quarter.

Which is remarkable given the massive global increase in grain costs - well that's where the price rises come in . Innovation well, it's like the "Drop a Jeans size" challenge... Kellogs have come up with a winner, just as thair customers can shrink... so can their boxes.

Yes. Coming soon to a Supermarket near you. Kellogs smaller boxes, Higher prices.

Kellogs started rolling out the new cereal boxes with 2.4 ounces less per box from June 2nd., which equates to a price rise "to low or midsingle wholesale price increases " Kellogg spokeswoman Susanne Norwitz said today.

According to recent reports from Kellogg Co., costs from commodities, energy, fuel and benefits would rise by an amount equal to about 80 cents per share for the year, from an initial forecast of 65 cents.

Froot Loops, Cocoa Krispies and Apple Jacks are the first off the line in their new compact higher cost content. This is after raising prices acros the whole Kellog product portfolio in January. They are not the first rival General Mills Inc. reduced the size of its boxes in 2007 to bring the shelf price in line with competition.

Of course this doesn't always work Germany-based retailer Metro (sales of €56.4bn last year) took Kellogg's products off its shelves last year after the cereal company attempted to pass on higher commodity costs through price hikes - an average of 2.7% .

We have brought this to readers attentuion earlier this year on Monday, February 25, 2008 Spring Wheat jumps 16% to US$23.10 a bushel as MGX opens with no limits trading - Big Food improves product pumps the price ...profits ..???? General Mills cut in half the number of pasta shapes it uses in Hamburger Helper, to 10. Food engineers and marketers even worked on the pasta bits so they nested together, enabling the company to shrink the box reducing packaging raw material costs 10%.

ConAgra wants to save US$225 Mn in cost savings - for example they will cut US$20 Mn. annually by reducing the number of can sizes from over 100 to 20 over 2 years, for everything from Hunt's tomato sauce to VanKamp beans. ...

Others like Sara Lee Bread - well they just keep pumping up the shelf prices. This is called their "Fuck the customer " Pricing Policy.