Is Your Company a Kellogg or a Post?

As our current economic situation continues to sputter, the tendency to compare our present situation with the Great Depression of the 1930s seems to crop up more frequently.

While I believe our current woes are far from coming close to the dark days of 1930 to the beginning of World War II, it is understandable that people are worried about their current and future well-being. Perhaps the most personally frightening prospect is the loss of one or both breadwinners’ jobs and all of the devastating effects that could follow.

Within the food manufacturing industry, the question of continued employment often rests with the viability of the company by whom a person is employed.  How is that company dealing with today’s marketplace? Are they “playing possum” with seemingly no plan, or imitating Chicken Little by panicking, while the bottom line continues to erode? Or, are they aggressively analyzing the situation and taking short-term actions to weather this storm while setting the table to take advantage of the inevitable turnaround that will come?

For an excellent real-world example of what I’m alluding to, let’s take a look at the different paths taken by two food-industry giants during the Great Depression: Kellogg Company and Post Foods.

Since I can’t say it better than an article that appeared in the April 20, 2009, issue of The New Yorker, here is the first paragraph of that article:

“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 percent and it had become what it remains today: the industry’s dominant player.”

When you analyze your company, do you see Post or Kellogg?