Big food production companies like our neighbor Tropicana are in a quandary.
The recent cold weather has hit crops hard, cutting yields and causing shortages and rising prices at the grocery store. On top of that, a recent study of business conditions around the country found that companies are paying more for materials, including oil, food products, steel, textile and chemicals.
So it’s not surprising that the recent rise in commodity prices is putting pressure on retailers, who have so far resisted passing along price increases. They know consumers will start searching for cheaper brands.
So if you are Tropicana, how do you stop from pushing escalating food costs onto the consumer?
Ahh, the magical equalizer -- adaptive, creative packaging.
Put a dent in your juice bottle or shrink your box of cereal by an inch or so. Consumers still bear the brunt of the “higher cost” but it’s camouflaged so the medicine goes down a little easier.
Creative or downsized packaging has been around for years but a recent Consumer Reports investigation showed more and more products are getting downsized -- often as much as 20 percent -- yet the prices for the items haven’t budged.
Household names like Tropicana orange juice, Ivory soap and Kraft singles American cheese are all playing the shrinking package game. “Higher commodity and fuel costs are expected to spike in food prices by as much as 3 percent is 2011,” said Tod Marks, senior editor and resident shopping expert at Consumer Reports. “But if manufacturers are skimping when costs go up, why aren’t they more generous when costs hold steady or fall?”
In the case of Tropicana orange juice, its previous 64-ounce juice container has shrunk to 59 ounces, a reduction of 7.8 percent.
Consumer Reports says although package downsize is a common practice to skirt price increases, it is not always easy for consumers to figure out which products have shrunk because relatively few package goods come in standard, recognizable sizes.
So if you want to try and outsmart the retailers, Consumer Reports suggests:
n Look at different brands. Not all manufacturers downsize.
n Compare unit price. Look at cost per ounce, per quart, per pound, per sheet. Promotions change, making one size or another cheaper from week to week.
n Try store brands. House brands are usually 25 to 30 percent cheaper than name brands and are often at least as good.
n Stock up and save. Supermarkets sell staples such as paper goods, cereal, and soups at or below cost and rotate them regularly. Many items go on sale at predictable intervals, so stock up until the next sale.
n Buy in bulk. Warehouse clubs offer everyday low prices on large sizes or multipacks.
n Contact the company. When Consumer Reports asked customer-service representatives why a product had been downsized, they often offered coupons as an apology. If enough people complain about downsizing, companies may actually listen.