In a bid to maintain the bottom line while the production costs increase, many food manufacturers are indulging in “the weight out” technique. Re-jigged products with reduced weights, slightly smaller packaging sizes but the same price tag are gracing supermarket shelves across the US, while consumers are not informed that their purchases have been downsized.
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The weight out boils down to a completely legal, if rather crafty, way to increase earnings on everyday products without upsetting price-conscious consumers who are used to low inflation on food goods.
One ‘culprit’ is the world’s largest maker of snack foods, PepsiCo subsidiary Frito-Lay. While the weight of several snack products has dropped by somewhere between 6.7% and 7.5%, spokesperson Lynn Markely admits that “in our business there are certain magical price points: 99 cents, US$1.29, US$2.99.” Price tags on Frito-Lay’s chips have indeed risen less than 1% a year recently, ensuring consumer loyalty to the brand.
But is it fair?
“It’s the most sensible way to deal with the increased cost of production,” argues Gene Grabowski, spokesman from the Grocery Manufacturers of America. Manufacturers must cover increased production costs but “consumers have repeatedly shown that they are more accepting of slightly smaller amounts in the package than an increase in prices.”
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By GlobalDataSo have customers and retailers brought this upon themselves? If consumers will not pay higher prices, and supermarket giants continue to noisily oppose price hikes, then there must be another way for companies to balance the bottom line. Emanuel Goldman, food and beverage analyst from ING Barings commented: “We haven’t encountered an environment like this in a long time. There’s more resistance to raising prices than in the past, so you’re going to get a lot more of these weight outs.”
Prudential analyst John McMillin added: “The key is to do it without the average consumer ever noticing. Some consumers will be able to tell, but you’d be hurt a lot more if you changed the price. Then every consumer would notice.”
Keeping faith with consumers
Consumers groups are up in arms against the weight out practise, however. Subtly reducing contents size is deceptive, they argue, especially in snack products that do not have the predictable standard size of, for example a quart of milk. But then, by law, content size is always stated clearly on the packaging and it seems it is up to the consumer to continually check products and make sure they are getting value for money.
Food producers like other manufacturers have to watch their bottom line, however food policy director at the Consumer Federation of America, Carol Tucker Foreman, strongly believes that “If you want to keep faith with the customers, be honest with them.”
