Shrinkflation

I read an article about what the author called "Shrinkflation." I had heard that word before but always referred to the idea of shrinkflation as "packaging inflation." Packaging inflation, or Shrinkflation, if you want to use that word, refers to companies dealing with higher production costs by reducing the amount of whatever is sold instead of increasing the price. If you ever see, and we all have, "new" size stamped all over the label, or words such as "family size," "larger size," "party pack" or "value size," you are seeing the precursor to Shrinkflation. What companies do is introduce these larger sizes, and charge more for them. Then, over time, they slowly reduce the amount (be it weight, volume or liquid measure) until they get back to the original size, or close to it, all while the price remains. The weight of the Hershey bar in the 1950s was about four ounces – a honker of a bar. This was its standard off-the-candy-shelf size. Today, it weighs about 1.5 ounces. To top it off, the price of the four-ounce chocolate bar was a nickel. Today's reduced version costs on average $1.30. Do the math, and today's bar has had a 6,610-percent increase since the 1950s. Yikes! Beside the bait-and-switch method of size manipulation to get you used to a higher price thinking you get more, then slowly shrinking the amount you get over time while keeping the price elevated, packaging inflation is a bit faster in accomplishing the task but just as stealthy. Millions are spent in research to make the necessary changes to packages to avoid raising prices and instead just give less of something. Shaping bottles with a "waistline" or conical bottoms skinnies up the volumes. Making cereal boxes the same dimension in front but reducing the width makes them appear the same size but with less. Gum sleeves may have a "blank" spot where a piece of gum used to be. You don't see the blank until after you've bought and opened it. Ice cream tubs may still look like a gallon tub but are miniature same-shape versions. Beer companies added water and sold it as "light" beer. Potato chip companies fill the bags with air so you can't tell the amount. Ice cream, butter and cream cheese companies came up with the "whipped' version, which contains more air. And air is free and takes up space to boot. Coffee is packaged in 12-ounce bags instead of the usual pound it used to be sold by. Pill bottles are stuffed with cotton to take up room so us shakers cannot hear the empty space. They say the cotton is to stop the pills from breaking, but we know better. Eggs are still sold by the dozen but one day we might see the "11" pack. Not just yet however, so the price just keeps going up. Same with a gallon of milk. Don't look now, but some toilet paper companies have (brilliantly, I might add) increased the size (diameter) of the cardboard roll so you get less paper. Didn't know that one, did you? Like I said, companies are shelling out millions to marketers to come up with new ways to save money while trying to put one past you. Or better said, to put "less" past you. Less product, that is. And we can't really blame them. They don't want you to get mad and stop buying their products. And they don't want to raise prices. So they just give you less. And they find ways to give you less without making it too obvious. All of this has given me a headache. So I better go buy a bottle of aspirin. Or buy two bottles, as a bottle of aspirin ain't what it used to be. Literally. This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a BA in Economics with honors, 1979, and California Insurance License #0L34249. His insurance agency is BAP INC. insurance services. Email: news@moneymanagementradio.com.