Their point is simply that your cost estimate is likely wrong.

> It costs pennies to produce, maybe a dollar in landed cost

Kellanova last had gross, operating, and net margins of ~35%, ~13%, and ~8%, respectively [1]. Likewise, Walmart achieved ~25%, ~4%, ~3% [2]. This isn't really compatible with "someone makes 700% of net profits on this box of cereal", unless you assume cereal is single-handedly subsidizing huge loss leaders for both its producer and retailers.

1. https://www.macrotrends.net/stocks/charts/K/kellanova/profit...

2. https://www.macrotrends.net/stocks/charts/WMT/walmart/profit...