Monday, December 19, 2011

Looking for Inflation? It’s Hiding in Smaller Package Sizes

By Len Penzo-Money Talks News

Inflation? What inflation?

The fact is, for those who are willing to look close enough, we’re actually being confronted by a serious bout of deflation - at least when it comes to the size of the containers sitting on our supermarket shelves.

With prices continuing to rise in the face of the depressed economic climate, manufacturers continue to find themselves caught in a classic dilemma: either raise prices and risk losing customers, or stave off the price increase by shrinking the size of their packaging ever so slightly.

Anybody care to guess which option the company brass most often decides to take when faced with the need to make that kind of lose-lose decision?

The Evidence is All Around You

Although I can’t prove it, I suspect the majority of manufacturers ultimately decide that a little deception is worth it if it means they can hold back those dreaded price increases.

A recent article on this topic in The New York Times provides plenty of circumstantial evidence. For example…
·                          Chicken of the Sea tuna now comes in 5-ounce cans, as opposed to the traditional 6-ounce containers
·                          Doritos, Fritos, and Tostitos reduced the quantity of chips in their bags by 20 percent
·                          Tropicana recently dropped their orange juice carton size from 64 to 59 ounces
·                          Nabisco’s Premium saltines and Honey Maid grahams have new packaging with 15 percent fewer crackers

Don’t be Too Hard on the Manufacturers

Despite all of these examples, I don’t really think this is a case of manufacturers trying to make a fast buck on the consumer.

Historically, manufacturers have been raising and lowering package sizes in order to keep from raising prices for a long, long time. For example, Hershey has been altering 
the size of their candy bars to account for fluctuating ingredient costs from as far back as 1908.

Between 1921 and 1968 the price of a Hershey chocolate bar held steady at a single nickel. During that time, the weight of the bar fluctuated — in both directions — from a high of 2 ounces in 1930 to a low of 0.75 ounces in 1968.

And while you may be annoyed that manufacturers surreptitiously reduce package sizes in order to hold prices steady, they’re not the ones who are instituting the monetary policies that have led to the current bout of inflation.

To be sure, inflation is getting so bad now that I see even TP isn’t immune from package downsizing. In their own study of shrinking package sizes, Consumer Reports found that a roll of Scott toilet paper – excuse me, toilet tissue – has 
9 percent less paper on a roll than it used to.

Hey, it could be worse. Scott could have tried holding prices down by going from 2-ply to 1-ply instead. Or even 1.3-ply.

Then again, I suspect that type of deception is something most of us would have noticed sooner rather than later.

Original Story Here.

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