America’s Shrinking Food Wraps

| 01/07/2008 | Reply

Mon Jun 30, 1:25 AM ET

American supermarkets are epics of excess: it often seems like every
item in the store comes in a “Jumbo” size or has “Bonus!” splashed
across the label. But is it possible that the amount of food Americans
are buying is, in fact… shrinking? Well, yes. Soaring commodity and
fuel prices are driving up costs for manufacturers; faced with a choice
between raising prices (which consumers would surely notice) or quietly
putting fewer ounces in the bag, carton or cup (which they generally
don’t) manufacturers are choosing the latter. This month, Kellogg’s
started shipping Apple Jacks, Cocoa Krispies, Corn Pops, Froot Loops and Honey Smacks containing an average of 2.4 fewer ounces per box.

Similar reductions have recently happened or are on the horizon for
many other products: Tropicana orange juice containers are shrinking
from 96 ounces to 89; Wrigley’s is dropping its the 17-stick PlenTPak
in favor of the 15-stick Slim Pack; Dial soap bars now weigh half an
ounce less, and that’s even before they melt in the shower. Containers
of Country Crock spread, Hellmann‘s mayonnaise and Edy’s and Breyer’s ice cream have all slimmed down as well (although that may not necessarily be a bad thing).

“People are just more sensitive to changes in price than changes in
quantity,” says Harvard Business School Professor John Gourville, who
studies consumer decision-making. “Most people can tell you how much a
box of cereal costs, but they have no clue how much is actually in it.”
Other segments of the economy have made similar moves to pass on their
higher costs to the consumer without raising prices directly. American Airlines announced
in May that it would charge $15 each way for a single checked bag, part
of what airlines have dubbed “a la carte” pricing, which – along with
the industrywide drive to put price tags on former freebies like soft
drinks, meals and headphones – some airline observers say is really an
effort to avoid increasing base ticket prices.

Once they’re asked about the changes, food manufacturers are quick to explain their own increasing overhead costs – a Kellogg‘s
spokeswoman said reducing the amount of cereal per box was “to offset
rising commodity costs for ingredients and energy used to manufacture
and distribute these products” – but most are not exactly going out of
their way to let consumers know they’re getting less for their money.
Some claim newly shrunk products are responses to consumers’ needs.
Tropicana told the New York Daily News
earlier this month that its orange juice containers, which also include
a newly designed cap and retail for the same price as the previous
larger size, were the result of customer complaints. Said spokeswoman
Jamie Stein, “We had a lot of spillage with our old products. It’s a value-added redesign.”

Reducing the size of products as a way of increasing prices is not new. Frito-Lay
cut the amount of chips in their bags and Poland Springs reduced its
water cooler jugs from 6 to 5 gallons years ago, all while keeping
prices the same. Still, says Chris Waldrop, director of the Food Policy
Institute at the Consumer Federal of America, “What’s going on now is
definitely reflective of rising food costs
and rising fuel costs.” Waldrop says he doesn’t blame manufacturers for
taking the step to protect their bottom lines, but says the food
companies should be honest with their customers about it. “If they’re
transparent and open, consumers are less willing to think
[manufacturers] are trying to pull one over on them,” says Waldrop. The
changing product sizes are part of the reason the Bureau of Labor Statistics
says groceries cost 5.8% more than the same time last year. Price
checkers in the department measure more than 2,000 food items to
determine overall food inflation, and when they notice product size
changes, they adjust the inflation index accordingly, according to
Ephraim Leibtag, an economist with the Economic Research Service of the
Department of Agriculture.

When a product amount drops below a benchmark like “1 pound” or “1
gallon” consumers often take note, according to Gourville. But after
that, it’s much easier for manufacturers to further whittle down
amounts. It’s all about taking away consumers’ ability to compare
apples to apples. The best way to compare food products if you’re not
sure if sizes have changed is to look at the “unit price,” which breaks
down the cost per ounce or per quart.

Category: Research, The Americas

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