Shoppers beware: Products shrink but prices stay the same
— -- There's a reason why the tub of ice cream you bought last week looks a tad smaller than ones you bought last summer.
Many major ice cream makers, hit by higher dairy costs, have shrunk their standard containers to 1.5 quarts from 1.75 quarts, about 1 cup less. The industry downsized from the traditional half-gallon (2 quarts) five years ago. In both cases, only the package shrank, not the price.
"Downsizing is nothing but a sneaky price increase," says Edgar Dworsky, former Massachusetts assistant attorney general in the Consumer Protection Division, now editor of Mouseprint.org, a consumer website. "I'm waiting to open a carton of eggs and see only 11."
It's not that bad, yet. But as packaged goods makers' costs rise, they eventually have just two choices: raise prices or put less stuff in the package. While most are trying a price boost first, a growing number are shrinking the contents of their packages — from Frito Lay's chips to Dial soap to Dreyer's ice cream.
"We did not in any way try to hide this," insists Tim Kahn, CEO of Dreyer's Grand Ice Cream, which also makes — and has shrunk — Edy's. "The package-size change couldn't be any more visible."
Driving forces behind the downsizing: Commodity costs are way up. Egg prices rose 44.9% from April 2007 through April 2008, reports the Bureau of Labor Statistics. Corn costs rose 69.5%. And wheat rose 96.9%. Energy prices also are up. So are packaging costs.
Typically, shoppers are asked to pay more, but these are not typical times. Raising prices when strapped consumers are price-sensitive can be a formula for disaster. That's why there's often less in the box instead.
Few track this and those who do, such as The Nielsen Co., are tight-lipped about the data except to their clients, who pay big bucks for the proprietary stats. But Nielsen's executive for consumer insights says up to 30% of packaged goods have lost content over the past year. Some prices went down, others did not.
"I don't think we've seen anything like this since I've been in the industry," says Todd Hale, who has been with Nielsen for 29 years.
In an unscientific visit to a supermarket this month, Lynn Dornblaser, new-products guru at market tracker Mintel, looked at 100 products and found about 10% appeared to have shrunk in contents, but not in price.
Many were from the most familiar brands. Companies don't like to discuss it, but here are examples:
•Less crunch. Since January, Frito-Lay has cut the number of chips in bags across all brands from Lay's to Doritos, though not all product sizes, spokeswoman Aurora Gonzalez says. The biggest cut was to some 12-ounce bags of chips, which are now 10. Some Frito-Lay offerings got higher prices.