After skyrocketing commodities prices raised Kellogg's input costs in mid-2008, the company was forced to raise consumer prices. As the recession takes its toll, however, Kellogg will have a difficult time maintaining demand at the elevated prices. Heinz could be hurt by consumers who are looking to spend less during the current economic downturn. Instead of buying brand name products, consumers will turn to private label products which are comparable, but cheaper. This could prompt a price war in which Kellogg will have to lower prices in order to compete.
