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I think cereal is brought in to demonstrate the absurdity of the situation, where something so basic as worker's or renter's rights are non-existent but somehow energy already has went into something so stupid as cereal, which indeed nobody cares about.
I think it’s more because in American anti communist propaganda the ability to choose between different brands and varieties of products was often highlighted as one of the great strengths of capitalism. It is certainly a benefit of markets over poorly run centralized economies, but there’s everything from market socialism to centralized economies that place more emphasis on ensuring consumer satisfaction.
But yeah it’s often a thing that new socialists in America mock