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NEWSLETTER[/paste:font]
Beware Of 'Shrinkflation,' Inflation's Devious Cousin
July 6, 20216:30 AM ET
GREG ROSALSKY
Don Emmert/AFP via Getty Images
A couple of weeks ago, Edgar Dworsky walked into a Stop & Shop grocery store in Somerville, Mass., like a detective entering a murder scene.
He stepped into the cereal aisle, where he hoped to find the smoking gun. He scanned the shelves. Oh no, he thought. He was too late. The store had already replaced old General Mills cereal boxes — such as Cheerios and Cocoa Puffs — with newer ones. It was as though the suspect's fingerprints had been wiped clean.
Then Dworsky headed toward the back of the store. Sure enough, old boxes of Cocoa Puffs and Apple Cinnamon Cheerios were stacked at the end of one of the aisles. He grabbed an old box of Cocoa Puffs and put it side by side with the new one. Aha! The tip he had received was right on the money. General Mills had downsized the contents of its "family size" boxes from 19.3 ounces to 18.1 ounces.
Dworsky went to the checkout aisle, and both boxes — gasp! — were the same price. It was an open-and-shut case: General Mills is yet another perpetrator of "shrinkflation."
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Mouseprint. He refers to it by its original name, downsizing, but economist Pippa Malmgren rechristened it "shrinkflation" about a decade ago, and the term stuck. Downsizing and shrinkflation both refer to the same thing: companies reducing the size or quantity of their products while charging the same price or even more.
"Downsizing is really a sneaky price increase," Dworsky says. "Consumers tend to be price conscious. But they're not net-weight conscious. They can tell instantly if they're used to paying $2.99 for a carton of orange juice and that goes up to $3.19. But if the orange juice container goes from 64 ounces to 59 ounces, they're probably not going to notice."
[Editor's note: This is an excerpt of Planet Money's newsletter. You can sign up here]
If consumers were the rational creatures depicted in classic economic theory, they would notice shrinkflation. They would keep their eyes on the price per Cocoa Puff and not fall for gimmicks in how companies package those Cocoa Puffs. A study by John T. Gourville and Jonathan J. Koehler analyzed data from the market for cereal and other sectors and found that consumers are much more gullible than classic theory predicts. They are more sensitive to changes in price than to changes in quantity. Companies, of course, have known this for years.
650 sheets. Now you have to pay extra for "Mega Rolls" and "Super Mega Rolls" — and even those have many fewer sheets than the original. To add insult to injury, Charmin recently shrank the size of their toilet sheets. Talk about a crappy deal.
Shrinkflation, or downsizing, is probably as old as mass consumerism. Over the years, Dworsky has documented the downsizing of everything from Doritos to baby shampoo to ranch dressing. "The downsizing tends to happen when manufacturers face some type of pricing pressure," he says. For example, if the price of gasoline or grain goes up.
That is why, when the government began reporting surges in inflation several months ago, Dworsky was on the lookout for its devious, shrinkifying cousin. We're now seeing a wave of shrinkflation, from Tillamook ice cream to Royal Canin cat food. "As we're seeing inflation picking up now, that's why I think you're going to see more items being downsized," Dworksy says. "And maybe it's going to be a double-whammy: We're going to see some products going up in price at the same time that you're actually getting less in the package."
A taller cereal box does not always mean more cereal
Not all consumers are oblivious to shrinkflation.
Jonathan Fitzer is a big fan of Cinnamon Toast Crunch, another cereal made by General Mills. A couple of weeks ago, he went to a local grocery store in Tampa, Fla., to re-up. But on the shelf were two different versions of the product. The old box was the same as always. The new box, however, was taller and skinnier. And it was adorned with a picture advertising Space Jam, a new movie reboot starring LeBron James. Fitzer might have been forgiven for assuming a taller cereal box meant more cereal. "And then I looked at the bottom and I saw the numbers were off and I was like, 'oh, come on now. I'm getting ripped off here,'" he says.
Fitzer follows the "r/shrinkflation" thread on Reddit, and he uploaded a picture of the two boxes on the site. "That's crazy shrinkage," said one commenter. Another had words for the makers of Cinnamon Toast Crunch: "Why ya being shady, yo?"
Fitzer's shrunken Cinnamon Toast Crunch
Jonathan Fitzer
Last week, General Mills announced the rising cost of ingredients, packaging, labor, and trucking was forcing it to revamp its business. It said that it was taking "pricing actions" and other steps to grapple with this inflation. We reached out to General Mills about reports that it's downsizing its cereals as part of its strategy.
"General Mills has been working to create consistency and standardization across our cereal products, making it easier for shoppers to distinguish between sizes on shelf. For consumers seeking the best price per ounce, the most value is normally in our larger boxes of cereal," says Kelsey Roemhildt, a General Mills spokesperson. "This change also allows more efficient truck loading leading to fewer trucks on the road and fewer gallons of fuel used, which is important in both reducing global emissions as well as offsetting increased costs associated with inflation."
General Mills' reframing of its shrinkflation seems to be pretty typical of Corporate America. Companies often sell downsizing as a way to help the environment, offer consumers more choice, or improve the quality of their products. When a spokesperson for Charmin, for example, was confronted by reporters at WBUR about shrinking the size of their toilet sheet squares, she suggested it was the result of "innovations" that allow consumers to, basically, wipe their butts more efficiently.
If this keeps up, maybe someday we'll all be living in a Lilliputian dystopia where we're forced to eat miniature candy bars, drink tiny drinks, and wipe our bottoms with teeny-tiny squares of paper. Or maybe consumers will start to notice and voice concern and the power of consumer demand will force companies to listen and right-size their products. Until then, our prayers are with the lovers of Cocoa Puffs.
Did you enjoy this newsletter segment? Well, it looks even better in your inbox! You can sign up here.
Planet Money
NEWSLETTER[/paste:font]
Beware Of 'Shrinkflation,' Inflation's Devious Cousin
July 6, 20216:30 AM ET
GREG ROSALSKY
Don Emmert/AFP via Getty Images
A couple of weeks ago, Edgar Dworsky walked into a Stop & Shop grocery store in Somerville, Mass., like a detective entering a murder scene.
He stepped into the cereal aisle, where he hoped to find the smoking gun. He scanned the shelves. Oh no, he thought. He was too late. The store had already replaced old General Mills cereal boxes — such as Cheerios and Cocoa Puffs — with newer ones. It was as though the suspect's fingerprints had been wiped clean.
Then Dworsky headed toward the back of the store. Sure enough, old boxes of Cocoa Puffs and Apple Cinnamon Cheerios were stacked at the end of one of the aisles. He grabbed an old box of Cocoa Puffs and put it side by side with the new one. Aha! The tip he had received was right on the money. General Mills had downsized the contents of its "family size" boxes from 19.3 ounces to 18.1 ounces.
Dworsky went to the checkout aisle, and both boxes — gasp! — were the same price. It was an open-and-shut case: General Mills is yet another perpetrator of "shrinkflation."
Article continues after sponsor message
Mouseprint. He refers to it by its original name, downsizing, but economist Pippa Malmgren rechristened it "shrinkflation" about a decade ago, and the term stuck. Downsizing and shrinkflation both refer to the same thing: companies reducing the size or quantity of their products while charging the same price or even more.
"Downsizing is really a sneaky price increase," Dworsky says. "Consumers tend to be price conscious. But they're not net-weight conscious. They can tell instantly if they're used to paying $2.99 for a carton of orange juice and that goes up to $3.19. But if the orange juice container goes from 64 ounces to 59 ounces, they're probably not going to notice."
[Editor's note: This is an excerpt of Planet Money's newsletter. You can sign up here]
If consumers were the rational creatures depicted in classic economic theory, they would notice shrinkflation. They would keep their eyes on the price per Cocoa Puff and not fall for gimmicks in how companies package those Cocoa Puffs. A study by John T. Gourville and Jonathan J. Koehler analyzed data from the market for cereal and other sectors and found that consumers are much more gullible than classic theory predicts. They are more sensitive to changes in price than to changes in quantity. Companies, of course, have known this for years.
650 sheets. Now you have to pay extra for "Mega Rolls" and "Super Mega Rolls" — and even those have many fewer sheets than the original. To add insult to injury, Charmin recently shrank the size of their toilet sheets. Talk about a crappy deal.
Shrinkflation, or downsizing, is probably as old as mass consumerism. Over the years, Dworsky has documented the downsizing of everything from Doritos to baby shampoo to ranch dressing. "The downsizing tends to happen when manufacturers face some type of pricing pressure," he says. For example, if the price of gasoline or grain goes up.
That is why, when the government began reporting surges in inflation several months ago, Dworsky was on the lookout for its devious, shrinkifying cousin. We're now seeing a wave of shrinkflation, from Tillamook ice cream to Royal Canin cat food. "As we're seeing inflation picking up now, that's why I think you're going to see more items being downsized," Dworksy says. "And maybe it's going to be a double-whammy: We're going to see some products going up in price at the same time that you're actually getting less in the package."
A taller cereal box does not always mean more cereal
Not all consumers are oblivious to shrinkflation.
Jonathan Fitzer is a big fan of Cinnamon Toast Crunch, another cereal made by General Mills. A couple of weeks ago, he went to a local grocery store in Tampa, Fla., to re-up. But on the shelf were two different versions of the product. The old box was the same as always. The new box, however, was taller and skinnier. And it was adorned with a picture advertising Space Jam, a new movie reboot starring LeBron James. Fitzer might have been forgiven for assuming a taller cereal box meant more cereal. "And then I looked at the bottom and I saw the numbers were off and I was like, 'oh, come on now. I'm getting ripped off here,'" he says.
Fitzer follows the "r/shrinkflation" thread on Reddit, and he uploaded a picture of the two boxes on the site. "That's crazy shrinkage," said one commenter. Another had words for the makers of Cinnamon Toast Crunch: "Why ya being shady, yo?"
Fitzer's shrunken Cinnamon Toast Crunch
Jonathan Fitzer
Last week, General Mills announced the rising cost of ingredients, packaging, labor, and trucking was forcing it to revamp its business. It said that it was taking "pricing actions" and other steps to grapple with this inflation. We reached out to General Mills about reports that it's downsizing its cereals as part of its strategy.
"General Mills has been working to create consistency and standardization across our cereal products, making it easier for shoppers to distinguish between sizes on shelf. For consumers seeking the best price per ounce, the most value is normally in our larger boxes of cereal," says Kelsey Roemhildt, a General Mills spokesperson. "This change also allows more efficient truck loading leading to fewer trucks on the road and fewer gallons of fuel used, which is important in both reducing global emissions as well as offsetting increased costs associated with inflation."
General Mills' reframing of its shrinkflation seems to be pretty typical of Corporate America. Companies often sell downsizing as a way to help the environment, offer consumers more choice, or improve the quality of their products. When a spokesperson for Charmin, for example, was confronted by reporters at WBUR about shrinking the size of their toilet sheet squares, she suggested it was the result of "innovations" that allow consumers to, basically, wipe their butts more efficiently.
If this keeps up, maybe someday we'll all be living in a Lilliputian dystopia where we're forced to eat miniature candy bars, drink tiny drinks, and wipe our bottoms with teeny-tiny squares of paper. Or maybe consumers will start to notice and voice concern and the power of consumer demand will force companies to listen and right-size their products. Until then, our prayers are with the lovers of Cocoa Puffs.
Did you enjoy this newsletter segment? Well, it looks even better in your inbox! You can sign up here.
