The dastardly practice of food downsizing dominated food industry news at the start of 2011, after a Consumer Reports expose on the topic. The report was a scathing one on the ways in which food companies are cutting costs by shrinking product packaging and shaving the volume. In truth, the product package downsizing practice does have a place in the food packaging industry outside of padding the pockets of food company CEO's.
5 Reasons for Food Package Downsizing
1. Cost Cutting.
Yes, the cost of manufacturing goods affects a manufacturer's decision to repackage a product or reduce the amount of food in the package. Food prices are not just the price of the ingredients inside the product, but also include workforce costs, freight, infrastructure, administrative costs, and marketing, along with a slew of fees, taxes and cost of retailer discounts that are required from the time the ingredients leave their source to the moment that you pluck it off the shelf. All of these costs must be recouped for each package of food sitting on store shelves.
When any of these costs rise, so must the shelf price. However, consumers are more apt to buy a cheaper product in face of a cost increase. To keep the consumer happy and the price as steady as possible, manufacturers redesign packages to fit the amount of food product that can be sold at the current price and still pay the costs the product has accrued.
For example, when the price of oranges increased, companies didn't want to increase the price of the gallon of orange juice to match it. Orange juice drinkers would have switched to store brands or picked up the frozen concentrate. This would cause the company to lose even more money in lost sales. The powers that be within the orange juice company thus ordered manufacturers to cut the size of the package, lightening the bottle by a few ounces. The company can pay its costs and the consumer doesn't pay any extra money for their morning o.j.
2. Jumping on the eco-friendly bandwagon.
Food packaging has always been the focus of companies looking to make the products and the manufacturing company more environmentally friendly. The efforts have resulted in package reductions throughout the manufacturing sector, including food production. In many cases, a package redesign that seems smaller may actually contain the same amount of product as before, or very close to that amount.
3. Fulfilling consumer demand.
Consumers are increasingly turning to products that are easier to carry, contain single serving sizes or those that are much smaller than the well known family size, and are easy to eat on-the-go. To compete in this growing market, food companies must downsize their products.
4. Beating the Competition.
Large retail chains also dictate the size and price of the product. In order to compete in these stores, the product price must match the quality of other items within that price bracket or risk losing sales. Sticking a price on the item that does not meet costs is paramount to suicide for a food company. The only other option is reducing the size of the food package used. That is why some products vary in size from a box retailer to that of regular grocery stores carrying the items.
5. Marketing Gone Wrong.
Some product package redesign projects and the subsequent food downsizing are due to marketing and branding changes. Although the entire company tries to come together and deliberate on the change, some ideas are given life that turn out to be even worse when conceptualized. Companies usually reverse them.
The reasons behind product downsizing are not always profit-driven. In fact, you should expect to see a rise in the practice when the cost of raw food materials increase. The practice isn't new, and most companies announce the design changes. Whatever the reason behind the changes, the decision to buy a product or leave it on the shelves rests with consumers.