CPG Companies Start to Shrink Packages

Experts predict “shrinkflation” will become more prevalent in the coming months.

June 03, 2021

Yogurt Packaging on Conveyor Belt

BOSTON—To combat higher labor costs and materials, CPG companies are downsizing packaging, the Washington Post reports. Economists and consumer analysts predict more companies will turn to “shrinkflation” in the coming months, churning out smaller packages of toilet paper, paper towels, diapers and potato chips. Similar cutbacks happened during the Great Recession in 2008.

“Consumers check the price every time they buy, but they don’t check the net weight,” said Edgar Dworsky, a consumer advocate who has kept an eye on product sizes for more than three decades. “When the price of raw materials, like coffee beans or paper pulp goes up, manufacturers are faced with a choice: Do we raise the price knowing consumers will see it and grumble about it? Or do we give them a little bit less and accomplish the same thing? Often it’s easier to do the latter.”

Kimberly-Clark indicated it would raise prices on Scott toilet paper, Huggies diapers and other products 4% to 9% starting in June, while Procter & Gamble will raise prices starting in September. Costco officials said they were shelling out more to purchase goods, including 20% more for beef and up to 10% more for clothing. They have also floated the idea of increasing consumer prices to maintain profitability.

Meanwhile, CPG companies are turning to smaller product sizes that are usually the same height or shape as the previous version. “[Consumers] are not completely rational: The one piece of numeric information people are sensitive to is price,” said Julio Sevilla, a marketing professor at the University of Georgia’s Terry College of Business. “Size matters less.”

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