New York (CNN Business)Less cereal in the box. Smaller snack sizes. Ice cream gone missing in a container.
You’re not losing your mind. You are actually paying the same price or more these days for everyday items in your fridge and pantry but running through them more quickly because their sizes have shrunk.The reason? A tactic known as “shrinkflation,” deployed by consumer product brands and grocery stores. The phenomenon — getting less for your money because a manufacturer has reduced the size of the product— has been going on for decades, but it typically becomes more common when companies’ costs go up like the inflation surge we are seeing today.
When costs rise, manufacturers of consumer goods look for ways to offset the increases they are paying for commodities, transportation, labor and other expenses. In response, they usually raise prices on existing products or whittle down the sizes of their goods, thereby increasing the price per unit of what you’re getting. Those increases are then passed on to shoppers via stores, who purchase products from consumer goods companies.
Why you're seeing fewer clothing sales right nowConsumers are sensitive to price hikes, but they pay less attention to how much a product weighs. While product quantities are printed on labels, few people actually take the time to do the math to figure out exactly what they’re paying per ounce. That means it’s easier for a brand to sneak in a slightly smaller box on the shelf or take a few sheets out of a toilet paper roll than it is to raise prices without consumers reacting and perhaps switching brands or not buying the product.Read More”Consumers are price conscious. They will notice if an orange juice manufacturer, for example, raises the shelf price from $2.99 to $3.19,” said Edgar Dworsky, a former assistant attorney general in Massachusetts and longtime consumer advocate who tracks product downsizing on his website ConsumerWorld.org. “If the manufacturer makes the carton of orange juice several ounces less in each carton, they know consumers may not catch it. And that’s because consumers are not net weight conscious.”
A long history
Shrinkflation has a long history, according to Dworsky, and has lead to smaller toilet paper rolls, candy bars and potato chip bags over the years. Dworsky tracks shrinkflation with the help of eagle-eye readers and posts photos of smaller packages and net weights next to previous versions of products. There is even a Reddit forum dedicated to shrinkflation, documenting everything from smaller deodorant sizes to ice tea bottles.A few recent examples of products that have been slimmed down, according to Dworsky: He found at a grocery last week in Massachusetts that Cocoa Puffs’ family size box had dropped from 19.3 ounces to 18.1 ounces, while Cinnamon Toast Crunch had fallen from 19.3 ounces to 18.8 ounces. The new, smaller boxes were $3.99, the same price as the larger boxes. That means consumers lost a bowl of cereal when they purchased the new one.
Grocery stores are excited to charge you higher pricesGeneral Mills (GIS) makes both brands. It “has has been working to create consistency and standardization across our cereal products, making it easier for shoppers to distinguish between sizes on shelf, Kelsey Roemhildt, a General Mills spokesperson, said in an email. “For consumers seeking the best price per ounce, the most value is normally in our larger boxes of cereal.”Consumers are getting fewer snacks for their buck, too. A reader sent in photos to Dworsky of a family size whole grain Wheat Thins box that had dropped from a pound in April to 14 ounces in May. The price was $3 for both boxes. (Mondelez (MDLZ), the maker of Wheat Thins, did not respond to request for comment.)
‘Price-pack architecture’
Companies don’t often come out and say they are dropping their product sizes. Instead, they’ll say things like they are adjusting their “price-pack architecture.” There’s been a lot of talk of such changes recently with inflation on the rise and companies announcing price hikes. There is at least one company that has come out and told customers that it’s shrinking sizes because it’s becoming more expensive to make products.Tillamook, a creamery in Oregon, announced that it was reducing its family size container of ice cream from 56 ounces to 48 ounces because of higher costs for ingredients like berries while keeping the price the same.”In order to be profitable and support our farmer owners, we had two choices: increase the unit price per carton or reduce the carton size from 56 ounces to 48 ounces and keep the price the same,” the company said. “It was a difficult decision to make but we decided to choose the latter so that the affordable cost per carton of ice cream did not change for our fans.”Some consumer goods’ analysts expect companies to further reduce package sizes because of higher costs.
The producer price index, which measures prices paid by businesses, rose 7.3% in June from a year ago, according to the Labor Department. The June rise was the largest since the government started tracking 12-month data in November 2010.Nik Modi, a consumer goods’ analyst at RBC Capital Markets, said in an email that he expects downsizing to be “a big initiative for most [consumer product] companies as part of their revenue growth management strategies.”
Source: edition.cnn.com