Lawmakers target food companies they accuse of shrinkflation

Coca-Cola, PepsiCo, and General Mills are in the crosshairs

October 8, 2024

Two lawmakers Sen. Elizabeth Warren (D-Mass.) and Rep. Madeleine Dean (D-Pa.) are pressing three food companies on the issue of shrinkflation.

Shrinkflation is when food companies shrink the size of the product but charge the same amount of money.

Warren and Dean are targeting three companies in particular Coca-Cola, PepsiCo, and General Mills citing instances where all three have reduced package sizes but kept prices the same. They say the Family Size box of Cocoa Puffs went from 19.3 ounces to 18.1 ounces while charging the same price, at least initially. Similarly, they say PepsiCo replaced its 32 oz Gatorade bottle with a 28 oz bottle for the same price.

Shrinking the size of a product in order to gouge consumers on the price per ounce is not innovation, it is exploitation, the lawmakers wrote in the letter. Unfortunately, this price gouging is a widespread problem, with corporate profits driving over half of inflation.

Not surprisingly, food companies see it differently. They say there are two responses to inflation. They can keep the product size the same and raise the price to account for higher costs. Or, they can reduce the amount of the product and keep the price the same.

Nearly every company would like to avoid raising the price because it discourages the consumer from buying it, therefore shrinking the size appears the better option from a competitive standpoint.

Just how common is shrinkflation?

Dr. Ernest Baskin, an associate professor and chair of the Food, Pharma and Healthcare Department at Saint Josephs University, says government data actually show shrinkflation is trending lower.

Per Bureau of Labor Statistics (BLS) data, we know that household paper goods and snacks are two categories that have reduced package sizes, Baskin wrote in an opinion piece for Grocery Drive. At the same time, we also know that these changes correlate to a spike in prices for wood pulp and sugar, in addition to myriad other external factors that influence manufacturing costs.

In June, ConsumerAffairs analyzed new data from the Consumer Price Index (CPI) on product downsizing and upsizing, which published at the end of May 2024 and will update quarterly. The CPI published the data in response to concerns about shrinkflation, or the practice of packaging fewer units in a product while charging the same or more.

Companies downsized 3,184 items between Jan. 2015 to March 2024, but they also upsized 1,386 items, according to the CPI. Since inflation peaked in June 2022, companies have downsized 664 items and upsized 192 items, accounting for around 21% of downsizing and 14% of upsizing since 2015, the data show.

 

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