U.S. Companies Shrink Packages as Food Prices Rise

Food prices have been on the rise. And the bad news is, the price hikes -- in many cases diguised by smaller packaging instead of higher item prices -- are likely to continue in earnest this year. U.S. food prices have been rising in the last year, but it seems the growth is only just beginning. A sharp jump in commodities' prices this year will soon result in sticker shock for American consumers.

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

Of course, straightforward price hikes could cause consumers to buy less of those products or to choose less costly store brands. So in many cases, food companies are trying a different tactic: Keeping the price of an item the same while decreasing the amount of food in the package. The company recoups the costs of the rise in commodities and hopes consumers don't notice that they're getting less of the product for the same price.

Food companies have no obligation to tell customers about the smaller packages, but may suffer a backlash from consumers who notice how the packaging trick works. Here are some of the shrinking products that you might notice in your grocery aisles:

Kellogg has reduced the size of its cereal boxes as grain prices have grown.Kellogg Cereal
Company: Kellogg (K)
Commodities: corn, wheat, sugar
Size Reduction: roughly 15%, or 2.4 ounces, on average
Kellogg, which makes cereal such as Apple Jacks and Corn Pops, has passed higher grain costs on to consumers. In 2008, the company reduced the amount of cereal in its boxes by an average of 2.4 ounces. And in February, the company announced that it will raise the price of its cereals 3% to 4%. According to a U.S. Agriculture Department report in March, "higher wheat commodity costs should begin to affect cereal and bakery product prices over the next few months, causing prices to rise 3.5% to 4.5% overall in 2011."

Snickers Bars
Company: Mars
Commodities: cocoa, dairy, nuts
Size Reduction: 11%, or 0.41 ounces
Supposedly in response to pleas from obesity activists, the Mars Company split their "King Size" Snickers bar in half so that it could be more easily shared between two people. What calls the nobility of the company's intentions into question is that, in addition to making the cut, Mars also reduced the total amount of candy in each package from 3.7ounces to 3.29 ounces -- an 11% decrease -- while keeping the price the same.

Tropicana is putting less orange juice in its containers after orange-juice concentrate prices have grown.Tropicana
Company:
PepsiCo (PEP)
Commodities: frozen orange juice concentrate, gasoline
Size Reduction: 8%, or 5 ounces
A series of prolonged frosts last year sent citrus prices up 11.5% and drove up the price of frozen orange-juice concentrate to several-year highs. Meanwhile, the cost of transporting the concentrate has gone up as gas prices have increased. In response, Tropicana has made two adjustments: It increased the price of its gallon jugs by 5-8% and stealthily reduced the size of its half-gallon cartons from 64 ounces to 59 ounces. This 5-ounce reduction represents nearly an 8% decrease in size.

Haager-Dazs ice cream no longer comes in a pint.Haagen-Dazs
Company:
General Mills (GIS)
Commodity: dairy, sugar, cocoa
Size Reduction: 12.5%, or 2 fluid ounces
The luxury-ice-cream company reduced the size of its standard container to significantly less than a pint, cutting it 12.5% from 16 fluid ounces to 14 fluid ounces. To make the smaller package less obvious, the company cleverly kept the top the same size, so it looks identical from above, but tapers dramatically in the middle. Haagen-Dazs's cheaper brands, Edy's and Breyer's, have cut their portions as well. Daily prices increased just over 1% in 2010, but are expected to rise as much as 5.5% in 2011.

Chicken of the Sea Tuna
Company: Thai Union Group
Commodity: tuna
Size Reduction: 17%, or 1 ounce
Chicken of the Sea's albacore tuna, previously sold in 6-ounce cans, now comes in 5-ounce cans. Rising tuna prices amid a worldwide shortage of the fish are partly to blame. Other tuna brands also have shrunk their can sizes, a trend which has been going on for years. Just over a decade ago, tuna was most commonly sold in 7-ounce cans.

Frito-Lay now includes fewer chips in each bag.Frito-Lay Chips
Company: PepsiCo (PEP)
Commodity: wheat, corn, potatoes
Size Reduction: 12.5% - 20%
With all the air included in chips packaging, it is easy for manufacturers to reduce the amount of chips in the bags without drawing attention. PepsiCo reduced the Lay's "Family Size" potato-chip bag from 16 ounces to 14 ounces in 2009. Bags of Doritos, Tostitos, and Fritos now contain 20% fewer chips than they did in 2009, according to The New York Times. Even smaller bags have been reduced by a quarter of an ounce. Rising gain prices have driven the changes.

Saltines and Graham Crackers
Company: Kraft Foods (KFT)
Commodity: wheat, salt
Size Reduction: 15%
Earlier this year, Kraft introduced its "Fresh Stacks" packages for Nabisco Premium saltines and Honey Maid Graham crackers. The packages contain a higher number of smaller cracker sleeves, meant to do a better job of preserving freshness and making the crackers more portable. The entire "Fresh Stacks" boxes contain 15% percent fewer crackers than the original packages, however, and cost the same amount. Kraft is, undoubtedly, being hit by rising grain prices. "Fresh Stacks" may be one of the company's ways of passing costs on to consumers.

Reese's
Company: The Hershey Co. (HSY)
Commodity: cocoa, dairy, peanuts
Size Reduction: 37%, or 0.1 ounces
Cocoa futures have more than doubled in the past three years, hurting chocolate companies. The Hershey Co. has just increased its wholesale prices by 9.7% across its entire product line. Its also introduced new Reese's "Minis," which are smaller than the classic Reese's "Miniatures" and cost more, according to The New York Times. Through FreshDirect, Minis cost $4.59 for an 8-ounce bag, while Miniatures cost $4.49 for 12 ounces. In other words, the Minis cost $0.57 an ounce while Miniatures cost $0.37 an ounce.

Bounty
Company: Procter & Gamble (PG)
Commodity: lumber
Size Reduction: 7.2%, or 10 sheets
Since June 2010, lumber futures have increased more than 80%. The cost of manufacturing paper products has gone up as well, and companies are reducing the size of paper-based products -- like toilet paper, moist towelettes and paper towels -- as a result. Proctor & Gamble recently cut the size of its Bounty 2-ply paper towel rolls from 138 sheets to 128 sheets. The company attempted to mask this change by advertising the roll as "25% thicker." Despite the increased thickness, the package reportedly weighs less. Proctor and Gamble competitor Kimberly-Clark has also reduced the size of its "Scott" paper-towel rolls.

Heinz Ketchup
Company: H.J. Heinz (HNZ)
Commodity: tomatoes, sugar, salt, corn
Size Reduction: 11%, or 4 ounces
The cost of wholesale tomatoes more than tripled last year from the previous year, according to the USDA, and prices are expected to grow another 10% this year. In response, Pittsburgh-based ketchup and condiment company Heinz has cut the portions of several key products, including its flagship Heinz 57 sauce, which now comes in a 4-ounce smaller package with no reduction in price.


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1873 Comments

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passnethyme

Its known as the Republican 12 ounce pound, much less on some things. Check coffee?

April 22 2012 at 10:35 PM Report abuse rate up rate down Reply
Bruno T

Ultra SlimFast went from a 6-pack of 11oz cans to a 4-pack of 10oz plastic bottles for the same price. Ounce for Ounce, that equates to a 60% price increase. Speaking of equate, that is now my brand of choice. Equate brand which is sold at Wal-Mart,is sold in a 6-pack of 11oz cans. I wrote Unilever and told them their product can sit on the shelf and rot.

February 26 2012 at 5:36 PM Report abuse rate up rate down Reply
Charles Mabis

I do agree that the packages are getting much smaller, but I also have noticed that the prices are going up on the new smaller packages. Don't buy their crap. And Toilet Paper???? It is outrageous. Talk about literally flushing your money down the stool. It's not an oil by-product. I buy what I need and stock up when it is on sale. Actually got some on clearance a while back...did it have an expiration date???? I'm growing what I can and canning what I grow. That also cuts out all the added sugar also. Check the labels...sugar in green beans? No wonder we are all diabetic. When mom canned veggies, there was no added sugar and we were fine. Only now when the fast foods, processed foods industry took over are we all on the diabetic list.

June 07 2011 at 7:58 AM Report abuse +1 rate up rate down Reply
1 reply to Charles Mabis's comment
c.lancefrazier

Everything is an oil by-product (sort of)... Shipping costs are volatile; think diesel fuel price fluctuation and how many times your product is transported--raw material, processing equipment, utilities, shipping to wholesaler, shipping to retailer... And as for the toilet paper on clearance, it's not because it's going to expire; when brands redesign packaging, if they change the "quilted" design (all new and improved), or if your retail outlet changes vendors, boom--clearance--new item number on the shelf.

April 12 2014 at 1:46 AM Report abuse rate up rate down Reply
Paleo

Neither should medical care Jeanne but welcome to America.

April 19 2011 at 1:10 AM Report abuse rate up rate down Reply
Paleo

Just don't buy their junk. Check, rice, beans, vegetables, vitamins, some fruit. What more do you really need.

April 19 2011 at 1:09 AM Report abuse +1 rate up rate down Reply
1 reply to Paleo's comment
passnethyme

Rice, especially white is not fit for human conssumption.

April 22 2012 at 10:37 PM Report abuse rate up rate down Reply
sweetdream2you

This package shrinking buisness is nothing new, It's been going on for a while now. Unfortunatley this is only the beginning, soon not just the elderly will be eating cat food, all of us too will be in the same boat. I say try to be self
sufficient, that's the only way to go. Grow your own vegtables, and if you have land raise your own animals. Also if you live near a brook or river that has good flow hook up a water wheel, use solar and all other natural resources that are available. Folks we are in for a long ride, so hold on to your hats. Barter and trade whenever possible, just remember to be nice to your neighbor because, soon he might have a resource that could help you get through these tough times. Above all stay positive, cause change is inevitable. So go with the flow.

April 16 2011 at 12:33 AM Report abuse rate up rate down Reply
2 replies to sweetdream2you's comment
wood079

Great advice sweet, we have been "doing it" in upstate NY for about 6 yrs now and have learned a lot.

April 17 2011 at 8:03 AM Report abuse +1 rate up rate down Reply
Justin L Graupp

You are right 110%. and i love that idea of the electric production. i never thought of that, i have a creek next to me for years..... very goood

May 11 2011 at 9:32 AM Report abuse rate up rate down Reply
Jeanne

all this talk of rising prices. It seems the main reason for all these things is the Stock Market. The reason gas is so high is because the brokers are bidding on oil futures. Actually, oil should NEVER be a commidity.

April 15 2011 at 5:37 PM Report abuse +1 rate up rate down Reply
Jeanne

I hate to even talk about this......But toilet paper is so thin anymore, you can see thru it. Now that is downsizing.

April 15 2011 at 5:16 PM Report abuse +1 rate up rate down Reply
1 reply to Jeanne's comment
passnethyme

Its like Kleenx just use finger then wash.

April 22 2012 at 10:39 PM Report abuse rate up rate down Reply
Sam

I see this downsizing all over on products. Maybe the government tells them to do this so they don't have to document inflation. It's a total lie. Inflation is rampant, gas, food, paper, etc. We the people are tired of it. Make sure and remember this election time and don't let Obummer fake his way to another four years. This country is in a world of hurt. We are no longer a superpower.

About products going down in size. Well, the time is now to start cooking for ourselves. Eat fresh food, it's cheaper and healthier to prepare yourself. Quit buying canned and packaged sludge. Almost nothing in a vacuum packed package is healthy. Wake up. Quit buying this garbage if they downsize and play games, don't buy their products anymore, besides we'll be healthier. Make the big corps kiss our A$$. They will if we would not be so lazy and start preparing our own food instead of trusting them to have quality food in packages. Read the labels, salt, MSG and all kinds of fillers. All in the name of corporate greed. Prepare your own fresh food.

April 14 2011 at 6:54 PM Report abuse +1 rate up rate down Reply
otter

this country is lost . all its glory is gone...nothing made here anymore thanks to hillary and bill letting all the factorys go over seas with there fair trade agreements..no jobs,no education, illegal immigrates can walk in and take over, gobble up the social programs,country is broke,food prices are up, gas is over the top, were doomed, crime rates are up, jails are full,no jobs, should i go on.. and not one politician saying lets cap gas prices or lower them. why? all owned by the oil companys. shows you who runs this country...so sad.

April 14 2011 at 6:08 PM Report abuse +2 rate up rate down Reply