American sales portions and the obfuscation of Increasing Prices
Coffee. It’s an elixir that awakens our sleepy minds and bodies. It’s one of those rare restaurant commodities that is “all you can drink” here in the United States. Just ask Sting, who as rumor has it, spent countless hours in American coffee shops during the making of one of his early albums.
Coffee is such a huge part of our national lifestyle that companies like Starbucks can thrive, offering beans and flavors from countless parts of the world. It is so prolific, that one can now buy Guatemalan, Sumatran and even varieties associated with Kilimanjaro in your local supermarket. Coffee is to the caffeine-o-holic what wine is to the connoisseur.
There is however an alarming trend in the coffee world. It’s a deception that has been years in the making. In fact, this alleged conspiracy is not limited to coffee, but cuts across all foodstuffs like Doritos, Chocolate chips…why even Yogurt! I’m talking about package size, or the amount of ounces available in standard packaging found at your local retailer.
Some things we buy by unit weight or by volume. This is true of liquids like gas and milk, or commodities like bananas, sliced chicken or beef. Other items we have been trained to buy by the package, like chocolate bars, potato chips, ketchup, Ovaltine and yes….coffee.
In the 1970’s coffee came in 1 pound metal tins. You’d get out the can opener, have it perform its pirouette on the lid like a skater on ice, pop it off and begin your brew. After the can was empty your dad would take it down to his workshop and fill it with paint thinner and clean the brush from that week’s project, or perhaps have a new vessel in which to house his ever-increasing nut and bolt collection.
We can argue about the rationales for changing the size of the coffee can down to 15 ounces, and then 14 and so on. There was the cost of the actual metal commodity in the manufacture of a can. Then there were periodic spikes in gasoline prices which meant shipping anything heavy like metal was an issue. By 2010 a lot of cans had been replaced with lined cardboard tubes, and the ounces therein continued to shrink, 13 ounces becoming 12. Today you can find coffee in sizes as low as 10 ounces in a foil bag that dwarfs its metal grandfather. To the coffee companies it means more units per shipment and less shipping cost. A win-win! Or is it?
There is one loser, Joe Consumer. As consumers go, we’re all pretty normal. We have purchase habits, budgets and so on. We realize our coffee supply is waning and pick up a new package at the store. We approach the shelf and find our brand and notice the price is the same as last time; or so we think. What we missed is that the net weight we purchased decreased from 11.5 to 11 ounces, or worse still 11 to 10 ounces. It’s a cruel joke to play on the consumer but as long as the bill doesn’t go up, he or she doesn’t notice.
It’s inflation, getting less for the same money. For years now we’ve been told there’s no inflation. They are dead wrong.
It happens in Yogurt. The standard serving container sold in the 1970’s was 8 ounces and Dannon was a big player, along with Breyers and many others. Over the next 3 decades those sizes shrank and today Dannon is still in the business. Dannon’s OIKOS yogurt comes in containers as small as 4 ounces. It’s competitor Chobani has a 5.3 Ounce container, but if you choose to purchase its “Flip” product there’s maybe 4 ounces of yogurt in there. Prices for a “package” remain stable, but the amount you get is nearly 50% of what it was 30 years ago.
Many years ago, I had a friend who worked for Frito Lay. At the time, he told me that the four top things bought in a grocery store were Eggs, Milk, Bread and Doritos. If you’ve been buying Doritos over the years you’ve seen the 14 Ounce bag become 13, 12, 11 and now the current 10. I suppose it’s great for the individual that doesn’t eat them in quantity; there’s no grappling with staleness issues after the bag has been open for two weeks. Again, it really isn’t so much the decreasing size of the package as it is the sustained pricing of America’s favorite Nacho cheese creation. The “sticker price” is maintained in the $4 range, even though the offered portion is 33% less than years ago.
I think I was first exposed to this practice when I was a university student and we bought a case of Labatt’s Blue, a Canadian brew in which we chose to indulge when we had a few extra bucks. Little did we know that each case was 1 bottle short. Impossible you say, there were indeed 24 bottles in the box. The fact remains it was one bottle short. Had we purchased one of our other preferred brands like Schaefer or Piels, we would have gotten twenty four 12 ounce bottles, or 288 ounces. Labatt’s Blue came in 11.5 ounce bottles, twenty four servings at 276 ounces. This was of course the equivalent of 23 bottles of our other preferred brands. One bottle short….
It’s a clever practice, this diminution of portions, while maintaining price stability. No brand wants to be left behind in the race to pursue the static household budget. Each company maintains sales price by cutting its size, in order to maintain its presence in the American pantry. Sure your cart is 2/3 as full as it once was, but you’re still getting everything you want at the same price, right?
The next time you hear a Fed Chairman or a CNBC pundit tell you there’s no inflation, show him your bag of coffee, soon to be 9 ounces no doubt.
March 27, 2018 Update: Doritos now come in a 9 3/4 ounce bag!!!
