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Freshly squeezed: The ever-shrinking box and carton

Food companies have been quietly shrinking packages, giving shoppers less for their money. Consumers are beginning to take note.

Last update: December 2, 2008 - 8:28 AM

John Schafer wore a pained expression as he stepped back from the snack food display at a Minneapolis Cub Foods store.

He held two bags of Old Dutch Puffcorn, each costing $2. Yet one weighed 10 ounces and the other 9 ounces.

He studied the bags carefully. "I suppose this one is a little bit shorter and flatter," said Schafer, 50, a computer programmer from Minneapolis. "But they did a heckuva job disguising it."

In the past year, thousands of small, almost imperceptible changes swept through the grocery aisles where American families shop each day.

The indented bottom of a Skippy peanut butter jar got more indented, turning an 18-ounce jar into a 16.3-ounce one. Ice cream containers shrank by one-quarter of a quart. And for breakfast, a jug of Tropicana orange juice got 7 ounces lighter while that box of Froot Loops lost more than 2 ounces.

Shoppers without a keen eye and a willingness to read the fine print on labels might have missed what has happened: Food manufacturers were downsizing packages, while keeping prices the same, as they passed on higher food costs to consumers.

According to a recent analysis by Nielsen Co., about 30 percent of all packaged goods have lost content over the past year. This at a time when U.S. grocery bills are rising -- up 7.5 percent in October vs. the same month a year ago -- at the fastest rate in 18 years.

"It's become a game," said Susan Broniarczyk, a professor of marketing at the University of Texas at Austin. "How far can you go in reducing the size of a package while flying under the consumers' radar screen."

What began as a response to rising fuel and ingredient costs has become institutionalized at many companies. At General Mills, for example, cost-cutting is so embedded that the company even has its own intimidating term for it: "Holistic Margin Management."

It's not always about shrinking packages, which can account for as much as 75 percent of a product's cost. Even seemingly small changes in a package's design can mean millions of dollars in annual savings -- lessening pressure to raise prices to cover costs.

"This is very new thinking for our industry," said General Mills CEO Ken Powell. "We have an enormous percentage of our organization now looking for ways to eliminate basically what is waste."

There is an entire science behind packaging reductions, enlightened by a long list of unsuccessful changes.

Several years ago, Hormel experimented with chili in cardboard boxes, but consumers wanted their trusty can. Likewise, soup in vacuum-sealed packages has yet to catch on.

"There is only so much change consumers are willing to accept," said Dan Ariely, a Duke University economist and author of "Predictably Irrational," a book about how people make decisions.

For instance, food manufacturers know consumers react more to changes in height than width, so cereal boxes often get thinner before they get shorter, Ariely said.

Once a product changes, buyers often forget the previous size, creating a new standard. Five years ago, ice cream tubs were a half-gallon, or 2 quarts; few noticed when it dwindled to 1.75 quarts and then, this past year, to 1.5 quarts.

However, many shoppers have a vague feeling that food items are getting smaller.

Paying more for less

Vicki Chouinard, 55, suspects many packages have shrunk, but she doesn't have old boxes to make a comparison. "It just feels like my shopping cart is getting lighter," said Chouinard, a manager at Honeywell, as she walked through a Rainbow Foods store in Minneapolis.

Even the trusty milk jug is no longer safe. In September, Kemps LLC introduced a 94-ounce milk jug that is 2-ounces shy of three-fourths of a gallon. The company said it was responding to the growing number of empty nesters, who with kids gone, no longer want a full gallon. And it was trying to price milk at lower levels, as costs rose into the summer.

The average price of a gallon of milk hit $3.96 in July, up nearly 50 percent from five years ago.

"For people who didn't need a gallon, there was sticker shock," said Rachel Kyllo, Kemps spokeswoman. "We wanted to give them a quantity that was more appropriate to their needs."

But ounce-for-ounce, Kemps' new jug is significantly more expensive than its gallon counterpart.

When PepsiCo reduced the size of its Tropicana orange juice jug by 7 ounces, it touted the container's "new ergonomic design" and easy-to-open snap cap. Yet consumer advocates argued the new features were really meant to distract from the reduced weight.

"This is the packaging equivalent of three-card monte," said Ben Popken, editor of Consumerist.com, a website whose "Grocery Shrink Ray" tracks shrinking packages. "By changing several factors at the same time, food companies disguise the fact that you're getting less for the same price."

At General Mills, with more than 1,000 products and annual sales of $13.7 billion, everyone from factory-floor workers to brand marketers is encouraged to come up with ways to pare packaging costs. Tiny improvements, such as a thinner lid on Progresso soup cans, which saved nearly 360 tons of steel a year, are celebrated.

Not every shrinking container is about giving consumers less. Many just reduce costs for rising packaging material such as cardboard and plastic.

Take Gushers Fruit Flavored Snacks, where each pouch had a distinct design, based on its flavor. But as General Mills discovered in customer surveys, children just tore them open without knowing whether it was "watermelon blast" or some other flavor. By shifting to a standard pouch, the company saved $3 million a year.

Nearly $2 million annually was eliminated by changing multicolored Yoplait lids to a single color -- silver. Millions more were saved when General Mills went from 17 Old El Paso salsa caps to five.

The company also took the ax to Hamburger Helper, in an initiative that involved more than 300 people across every division at General Mills. The product, created in 1971 at a time of escalating food prices, stretched a pound of beef into a family meal by adding noodles and some extra flavoring.

But many innovations later, the comfort food had become exceedingly complex. The initial five flavors, including Rice Oriental, had mushroomed to 57 -- too many for many grocery stores to stock. Some, like Chicken Helpers Jambalaya, had limited appeal. What's more, there were 20 noodle shapes and some boxes had four spice packets.

In the fall of 2005, as rising fuel prices were eating away at Hamburger Helper's profits, executives met on a pontoon boat on a Minnesota lake to discuss creative ways to simplify the product.

Over the next two years, General Mills halved the number of meal versions (Beef Romanoff and Zesty Italian are gone), cut 10 noodle variations, and reduced excess spice packets. The changes allowed for a slightly thinner box, saving the company tons of cardboard and allowing more packages in cases, cutting on shipping costs.

"We increased the number of cases we could put on a truck by 30 percent," said CEO Powell. "Across a business that size ... you're talking about thousands of trucks that are suddenly off of the road."

The cost of producing Hamburger Helper fell 10 percent, allowing the company to avoid a price increase. Yet consumers hardly noticed the package was smaller. In fact, unit sales are growing at an annual rate of 6 percent, double its historic rate.

"The real breakthrough was this idea ... that all the changes we make that add components, that add complexity, that we think, 'Oh boy, this is great!' are not equally valued by our customers," said John Church, senior vice president of supply chain operations at General Mills.

Eating at home again

One reason food companies have gotten away with downsizing without alienating shoppers is that over the decades fewer people are preparing meals at home. So they pay less attention to measurements on packages, said John Gourville, a marketing professor at Harvard Business School.

"The reality is, people pay more attention to prices than sizes," Gourville said. "And the food companies know it."

But as the economy has soured, families are eating in more and starting to take notice. According to an October 2007 survey by America's Research Group, a market research firm in Charleston, S.C., nearly half (47 percent) of shoppers said they were aware that product packages were getting smaller.

Now that downsizing packages has become a "corporate strategy," says Gourville, it will become more difficult for food companies to fool consumers into paying the same for less content. "You can take an ounce out here and an ounce out there, and maybe people won't notice," he said. "But if you do it repeatedly, and people are only getting three servings per cereal box, then people are much more likely to say, 'What's going on here?' And it gets harder and harder to do."

Schafer, the computer programmer, said he's paying a lot more attention to the "unit price" labels on the shelf edges just under food packages. The labels show the cost of a product per unit of measure, such as per ounce or per pound.

"With something like cereal, where there are three or four different sizes, and the big one isn't always the best value, it really pays to look closely at the unit price," he said. "What you think you see on the shelf isn't always what you get."

Chris Serres • 612-673-4308

Readers first phoned in about high milk and egg prices more than a year ago. Within months, as corn and wheat prices reached new daily highs, food was on everyone's mind. Shortages led to food riots in Haiti and a run on rice from Cambodia to Costco. So what went wrong? This series, Our Hungry Planet, found powerful and conflicting forces around the world influencing the supply and price of food. Some individuals and businesses have profited handsomely, while others went hungry and grocery bills continued to rise.

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