Quarter of breakfast cereals' cost is spent on marketing, so…
Howard Lake | 24 June 2008 | Blogs
“One of the biggest costs in cereal manufacturing is not the value of the ingredients not the cost of the production, but the marketing. About a quarter of the money you spend on breakfast cereal goes on the cost of persuading you to buy it. That still leaves room for gross profit margins on processed cereals that are 40% to 45%.”
So writes Felicity Lawrence in The Guardian Weekend on 14 June 2008 in an edited extract from her book “Eat Your Heart Out: Why the Food Business is Bad For The Planet And Your Health”.
Where’s the public outcry about these costs? Why don’t you hear people saying that of course commercial manufacturing companies are very poorly run, they pay their staff far too much, and of course they wouldn’t ever spend their money on cereals.
Yet those same people will decry charities for spending money on fundraising, for paying professional staff to do an efficient job, and cite this as a reason why they don’t give to charity.
So, spend 25% on marketing to achieve a 40-45% gross profit. That’s a pretty good return on investment for a fundraising campaign.
So why is it OK for the likes of Kelloggs to achieve those levels of business investment and efficiency, but not for charities?
I suggest it’s a mix of double standards and an (wilful? nostalgic?) uninformed view of how charities operate.
Still, next time I hear someone telling me how poor charities are I might tell them a story about the corn flakes they had that morning…
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.