CEREAL MARKET CRUNCH : POST PLANS TO CUT PRICES, STREAMLINE COUPONS IN HOPES OF SPURRING SALES.

Byline: J.L. Hazelton Associated Press 

Honey Bunches of Oats, falling. Grape Nuts, shriveling. Shredded Wheat, crumbling.

Breakfast got a lift with Monday's announcement that Post Cereal is cutting prices an average of 20 percent. The company is also cleaning up coupon clipping - issuing a new coupon that will apply to all its cereals.

Post is betting that the price cuts will give a boost to the cereal business, which shrank slightly last year and has been flat so far this year. Post's own cereal sales have been declining, analysts said.

The company is taking aim at high prices and the frustration of cruising the crowded cereal aisle comparing a clutch of coupons to the more than 200 brands in a typical grocery store.

``We expect this will reignite growth in the ready-to-eat cereal market,'' said Mark Leckie, executive vice president and general manager of the Post Cereal division of Kraft Foods, Inc.

Doing away with coupons that apply to only one cereal and perhaps even just one size box will lower Post's costs and, the company figures, retailers'. The company won't say exactly when the new coupons will appear.

The price changes are expected to reach store shelves in two or three weeks and competitors weren't quick to say whether they would match the cuts.

For Irene Cotton of McCook, Neb., 20 percent isn't good enough.

``At times you can get a box of Post Toasties for 99 cents, and we'll buy that, but when they get up above that the best thing to do is just let them sit on the shelf,'' she said.

Some of Post's biggest competitors said they had already cut prices in recent years and Post was simply catching up.

Kellogg said it would set its prices on a product-by-product basis and said it cut the price of its version of Raisin Bran by nearly 16 percent recently.

Spokesman Anthony Hebron declined to discuss how his company might respond to Post's gambit.

At General Mills, spokesman Austin Sullivan said no changes were planned.

``They're following our lead two years later,'' Sullivan said, noting that Minneapolis-based General Mills chopped its overhead and reduced prices 11 percent across the board. ``Obviously, we think it's a good idea.''

Philip Morris stock was up 37-1/2 cents to $89.37-1/2 a share on the New York Stock Exchange.

The cut brings Post's suggested retail price for a 17.2 ounce box of Spoon Size Shredded Wheat down to $2.99 from $3.88; while a 20 ounce box of Premium Raisin Bran will cost $2.99 instead of $4.13; and a 16 ounce box of Honey Bunches of Oats will also go for $2.99, down from $3.85.

Actual retail prices are determined by individual retail stores and may vary.

The move means Post's corporate parent, Philip Morris Companies Inc., is likely to take a near-term hit of $50 million to $80 million in operating profits - ``Not a big deal for a company that size,'' said analyst John M. McMillin at Prudential Securities.

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Photo, Chart

Chart: (Color) Cereal price cuts

Betting that better value will stimulate demand, Post Cereal is cutting prices an average of 20 percent.

Associated Press

Photo: (Color) Post Cereal announced a price cut of 20% across its entire line Monday.