CEREAL SHOWDOWN

BY SLASHING PRICES 20%, THE POST DIVISION OF PHILIP MORRIS HOPES TO REGAIN BUSINESS. KEY QUESTION: WILL GROCERS PASS ON THE SAVINGS?

For years, cereal makers have been pounding home the message that their product is a really good deal, just pennies per serving. But consumers are not buying it anymore-- literally.

That's why Post Cereal, part of the Philip Morris consumer-goods empire, last week slashed the wholesale price of its 22 cereal brands an average of 20%. The price cuts, the most sweeping in decades, are designed to puff up Post's soggy sales. The No. 3 manufacturer had been losing ground to Kellogg and General Mills, the industry leaders in the $7.5 billion cold-cereal business, as well as to store brands....

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