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.
Consumers 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.
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.
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.
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.
“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.
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.”