<p><p> A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, <a href="https://www.cnn.com/newsletters/nightcap?source=nl-acq_article">here</a>.</p> <span>New York</span> <span>CNN</span> — <p> These past few years, it seems like food companies have been playing some serious mind games with us. </p> <p> When something you’ve always enjoyed eating suddenly started to taste a bit different, or the portion size felt smaller, there’s a pretty good chance your experience wasn’t an anomaly. </p> <p> As food companies have seen their costs rise substantially over the past few years, many have used two sneaky strategies, dubbed shrinkflation and skimpflation, to avoid having to raise the prices of their goods. </p> <p> <a href="https://www.cnn.com/2024/03/04/economy/cookie-monster-shrinkflation/index.html">Shrinkflation</a> happens when something has been reduced in size or volume, but the price stays the same — or, in some cases, even grows. <a href="https://www.cnn.com/2024/10/07/business/skimpflation-whole-food-ingredients/index.html">Skimpflation</a> refers to more subtle tweaks like, for instance, substituting cheaper ingredients to cut costs. </p> <p> Both tactics have drawn the ire of consumers across social media who, understandably, feel like they’re being deceived. Yet when companies simply pass along price increases to consumers, there’s also no shortage of backlash — <a href="https://www.cnn.com/2023/11/27/business/mcdonalds-burger-economy-nightcap/index.html">just ask McDonald’s</a>. </p> <a href="/2024/07/29/investing/mcdonalds-earnings"> <img src="https://media.cnn.com/api/v1/images/stellar/prod/gettyimages-1479484441.jpg?c=16x9&q=h_144,w_256,c_fill" width="100%" /> <span>In an aerial view, a sign is posted in front of a McDonald's restaurant on April 03, 2023 in San Pablo, California.</span> Justin Sullivan/Getty Images/File <p> <span>Related article</span> <span>Americans keep turning their backs on McDonald’s</span> </p> </a> <p> Up until recently, companies got away with giving angry customers the silent treatment or by putting out some carefully worded statement in an attempt to get back in their good graces. Their <a href="https://www.cnn.com/2024/06/25/business/outrage-usd18-big-mac-consumer-revolt/index.html">statements</a> would often read something like: We hear your frustration but c’mon, have some pity on us too. Oh, and by the way, we didn’t raise our prices as much as everyone is claiming so we’re not the bad guys here. </p> <p> Then, after companies like McDonald’s, Wendy’s and Burger King started seeing their revenue slide, they unveiled value menus and promos and, in some cases, promised to be more judicious about raising prices. </p> <p> Still, complaints about shrinkflation and skimpflation seemingly went unaddressed by companies. That’s finally starting to change. </p> <p> After fans of <a href="https://www.cnn.com/2024/10/07/business/skimpflation-whole-food-ingredients/index.html">Whole Foods’ iconic Berry Chantilly Cake</a> took to social media to rant about ingredient changes, the Amazon-owned grocery chain had an usually quick response, informing customers that the cake would soon revert to its original recipe. </p> <p> But wait — it gets even better! </p> <p> PepsiCo, the owner of Lay’s, Doritos, Tostitos and Ruffles chips, announced it will <a href="https://www.cnn.com/2024/10/16/business/tostitos-chips-shrinkflation-pepsi/index.html">put more chips</a> in some bags that had mysteriously gotten lighter. A PepsiCo spokesperson told my colleague Nathaniel Meyersohn that Tostitos and Ruffles “bonus” bags will contain 20% more chips for the same price as standard bags in select locations. The company is also adding two additional small chip bags to its 18-bag variety pack, the spokesperson said. </p> <p> The timing of PepsiCo’s changes is, on the surface, peculiar. The company’s customers have been complaining about shrinkflation for years now. </p> <p> However, it’s one thing for people to complain about shrinkflation, but if they continue giving in by purchasing the goods, companies have no reason to stop testing the limits of how much shrinkflation they can get away with. </p> <p> And for PepsiCo, it looks like customers have reached their limit, with snack sales and volume both dropping last quarter, according to the company’s latest earnings report. </p> <p> Now you may be wondering: How are they able to maintain the same price if they add more chips? </p> <p> It’s likely the profit margins on the snacks are high enough that adding in a few extra chips is “a relatively low cost for them,” said Chris Hydock, a marketing professor at Tulane University’s Freeman School of Business. That’s especially true since many of their own input costs have fallen after spiking during the pandemic. But the move, nonetheless, is “their way of giving customers more value.” (PepsiCo didn’t respond to CNN’s request for comment.) </p> <p> Sure, PepsiCo could’ve done what many retailers have started to do: slash prices. But it can quickly become an “If You Give a Mouse a Cookie” situation, where consumers will start expecting more discounts and more promotions, Hydock told CNN. </p> <p> The move by PepsiCo is likely to lead other snack manufacturers to follow suit, Robert Moskow, an analyst at TD Cowen, told Meyersohn. So the days of shrinkflation, at least when it comes to food, could be numbered. </p> <p> But don’t count on the mind games ending entirely. </p> <p> “I would expect (food companies) to shift their strategy and find a different mind game to play that maybe people are not quite looking out for yet,” Hydock said. </p></p>
A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.
New York CNN —
These past few years, it seems like food companies have been playing some serious mind games with us.
When something you’ve always enjoyed eating suddenly started to taste a bit different, or the portion size felt smaller, there’s a pretty good chance your experience wasn’t an anomaly.
As food companies have seen their costs rise substantially over the past few years, many have used two sneaky strategies, dubbed shrinkflation and skimpflation, to avoid having to raise the prices of their goods.
Shrinkflation happens when something has been reduced in size or volume, but the price stays the same — or, in some cases, even grows. Skimpflation refers to more subtle tweaks like, for instance, substituting cheaper ingredients to cut costs.
Both tactics have drawn the ire of consumers across social media who, understandably, feel like they’re being deceived. Yet when companies simply pass along price increases to consumers, there’s also no shortage of backlash — just ask McDonald’s.
In an aerial view, a sign is posted in front of a McDonald's restaurant on April 03, 2023 in San Pablo, California. Justin Sullivan/Getty Images/File Related article Americans keep turning their backs on McDonald’s
Up until recently, companies got away with giving angry customers the silent treatment or by putting out some carefully worded statement in an attempt to get back in their good graces. Their statements would often read something like: We hear your frustration but c’mon, have some pity on us too. Oh, and by the way, we didn’t raise our prices as much as everyone is claiming so we’re not the bad guys here.
Then, after companies like McDonald’s, Wendy’s and Burger King started seeing their revenue slide, they unveiled value menus and promos and, in some cases, promised to be more judicious about raising prices.
Still, complaints about shrinkflation and skimpflation seemingly went unaddressed by companies. That’s finally starting to change.
After fans of Whole Foods’ iconic Berry Chantilly Cake took to social media to rant about ingredient changes, the Amazon-owned grocery chain had an usually quick response, informing customers that the cake would soon revert to its original recipe.
But wait — it gets even better!
PepsiCo, the owner of Lay’s, Doritos, Tostitos and Ruffles chips, announced it will put more chips in some bags that had mysteriously gotten lighter. A PepsiCo spokesperson told my colleague Nathaniel Meyersohn that Tostitos and Ruffles “bonus” bags will contain 20% more chips for the same price as standard bags in select locations. The company is also adding two additional small chip bags to its 18-bag variety pack, the spokesperson said.
The timing of PepsiCo’s changes is, on the surface, peculiar. The company’s customers have been complaining about shrinkflation for years now.
However, it’s one thing for people to complain about shrinkflation, but if they continue giving in by purchasing the goods, companies have no reason to stop testing the limits of how much shrinkflation they can get away with.
And for PepsiCo, it looks like customers have reached their limit, with snack sales and volume both dropping last quarter, according to the company’s latest earnings report.
Now you may be wondering: How are they able to maintain the same price if they add more chips?
It’s likely the profit margins on the snacks are high enough that adding in a few extra chips is “a relatively low cost for them,” said Chris Hydock, a marketing professor at Tulane University’s Freeman School of Business. That’s especially true since many of their own input costs have fallen after spiking during the pandemic. But the move, nonetheless, is “their way of giving customers more value.” (PepsiCo didn’t respond to CNN’s request for comment.)
Sure, PepsiCo could’ve done what many retailers have started to do: slash prices. But it can quickly become an “If You Give a Mouse a Cookie” situation, where consumers will start expecting more discounts and more promotions, Hydock told CNN.
The move by PepsiCo is likely to lead other snack manufacturers to follow suit, Robert Moskow, an analyst at TD Cowen, told Meyersohn. So the days of shrinkflation, at least when it comes to food, could be numbered.
But don’t count on the mind games ending entirely.
“I would expect (food companies) to shift their strategy and find a different mind game to play that maybe people are not quite looking out for yet,” Hydock said.
