Tags

, , , ,

We have heard a lot about the rising costs of food, but costs are rising even more than consumers might think. Companies have been looking for ways to save costs, and one way is to minimize packaging or decrease the contents of their products

Consumers usually buy food products on a routine basis, so many items, like peanut butter and cereal, require little decision making; rather, they represent straight rebuys. However, Skippy peanut butter jars have gone from containing 18 ounces to just 16.3 ounces. The jar looks the same, except for the number of ounces listed on the label. The trick is that the indent in the bottom is just more indented.

Food companies also decrease the amount of food by redesigning the packaging, then advertising the new features. Consumers note the feature, not the difference in the amount they receive. Thus, Tropicana orange juice reduced its jugs by 7 ounces but also added a new cap that was easy to open.

General Mills even has a department devoted to cost cutting through package redesign or clever content reduction ideas, which it calls the “Holistic Margin Management” department. Because 75 percent of a product’s cost may be in the packaging, package savings can represent huge overall savings for the company.

Approximately 30 percent of packaged goods lost content in the past year, and most of them went unnoticed by consumers. Shoppers might see it when the height of a product declines, but a decrease in width is harder to recognize. Then, once the consumer buys a product with less content, it becomes the new norm, and the consumers forget what the package looked like initially.

And as companies change the packaging and decrease the content for the “same” product, they simultaneously raise prices.

Discussion Questions:

  1. What are some of the tricks companies use to disguise product size decreases?
  1. What are the ethical considerations of these moves?

Chris Serres, “It’s True: Food Packages Shrunk Last Year,” Minneapolis Star Tribune, December 31, 2008.

Advertisements