Take a look at how companies hide rising costs by shrinking the size of everyday products, from toilet paper to candy bars

general mills cereal
General Mills shrunk its “family size” boxes from 19.3 ounces to 18.1 ounces.

  • Prices of consumer goods are increasing, from food to household necessities.
  • The term shrinkflation describes brands selling smaller amounts of product for the same price as before.
  • It’s a sneaky way for brands to hide growing prices.
  • See more stories on Insider’s business page.

It’s not just you – some grocery products are getting smaller.

Ingredients and manufacturing are getting more expensive thanks to inflation, and if they can’t cut costs, companies have two main choices – hiking up prices or making their products smaller.

Many of these size changes are subtle, like making candy bars sold in multipacks smaller than ones being sold individually, or changing the shape of their products so you can barely notice the difference in weight.

“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,” consumer advocate Edgar Dworsky told The Washington Post.

This phenomenon, known as shrinkflation, was already happening before the coronavirus pandemic, but is set to get worse because of rising labor costs and ingredients prices combined with soaring demand and a shipping crisis.

Clorox now includes 75 wipes per pack, down from 85, for the same price.

Clorox and bleach wipes

Source: Reddit, Walmart

Walmart Great Value Paper Towels dropped from 168 sheets per roll to only 120, while the price stayed the same.

Walmart paper towel shelves
Walmart increased paper towel prices.

Source: The Washington Post

Frito-Lay just shrunk regular bags of Dorito’s from 9.75 ounces to 9.25 ounces. Both are currently for sale at Target for the same price.

Doritos pricing at Target
Frito-Lay shrank Dorito bags.

Source: Target

Hershey cut down its 18 ounce pack of dark chocolate Kisses by almost two ounces.

Hershey Kisses

Source: The Washington Post

Hefty’s mega pack went from 90 bags to 80 bags, at the same price.

Hefty 2

Source: The Washington Post

A two-pack of Reese’s Peanut Butter Cups used to weigh 1.6 ounces. Now it’s just 1.5 ounces.

Reese's Peanut Butter Cups two pack

Source: Confectionery News

Tubs of Pringles are different weights depending on the flavor in the US, but at Walmart they all cost the same.

Pringles prices on Walmart website

Source: Walmart

General Mills shrunk its “family size” boxes from 19.3 ounces to 18.1 ounces – a drop of nearly 10%.

general mills cereal

Source: NPR

Tillamook decreased the size of its ice-cream cartons from 56 ounces to 48 ounces. It said that it didn’t make the decision lightly, but that if it didn’t make it cartons smaller it would have had to hike up prices because of rising ingredients costs.

Tillamook icecream

Source: Tillamook

Some of Royal Canin’s cans of cat food now weigh 5.1 ounces, down from 5.9 ounces – but they still cost the same. Royal Canin, a subsidiary of Mars, said that it had reduced some product sizes because of “unprecedented demand” for pet food during the pandemic.

Royal Canin cat food

Source: The Washington Post

Charmin toilet paper originally had 650 sheets per roll. It now only contains around half of that – and even its “Mega Rolls” and “Super Mega Rolls” don’t have as many sheets as the original. The sheets have reportedly gotten smaller, too.

toilet paper prime day

Cadbury changed the shape of its famous Dairy Milk bars in 2013 – and changed the size of them, too. The individual pieces now have rounded edges and contain nearly 10% less chocolate than before.

Cadbury Dairy Milk

Source: BBC

But Dairy Milk isn’t the only product Cadbury, owned by Mondelez, has shrunk over the years. Chocolate bars it sells in multipacks weigh much less than ones it sells individually – and it announced plans to shrink down the size of multipack bars even further still.

Wispa chocolate

Source: BBC

Mondelez also owns Swiss chocolate company Toblerone, which makes distinctively triangular chocolate bars. In 2014 it reduced the weight of its bars by 25% by adding more space between each piece – but reversed the decision two years later after public outcry.

toblerone

Source: BBC

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Your next meal is getting more expensive. Here’s what’s driving the surge in food prices.

grocery store checkout conveyer belt supermarket cashier grocery shopping
  • Foods is getting more expensive at grocery stores and restaurants.
  • Some companies are raising prices, while others are selling smaller quantities for the same price.
  • Supply-chain shortages and poor weather are helping drive higher commodity costs.
  • See more stories on Insider’s business page.

Food prices are surging in grocery stores as well as on restaurant menus.

Last week, Chipotle hiked prices for menu items by about 4%, as the cost of labor and ingredients continues to rise amidst a spike in demand. Red Robin and Cracker Barrel have also increased prices by about 3%, The Wall Street Journal reported. The chains may be forced to further hike prices if commodity costs continue to inflate.

In May, US consumer prices hit their highest level in 13 years, jumping 5% from the previous year, as the cost of meat products and baked goods led the surge in food prices, according to the US Department of Labor.

“We’re in a period of unprecedented commodity inflation,” Unilever CEO Alan Jope told investors on Monday.

As a result of increased product costs, some companies including Unilever have begun selling products at the same cost, but in smaller quantities.

Even companies that cater to more frugal budgets have been forced to hike prices. Dollar Tree CEO Michael Witynski said in May that the company has struggled to keep prices low.

Why are food prices surging?

Food prices are rising in tandem with a broader inflation trend in the US. While vehicle and fuel costs have led the surge in consumer prices, food prices have also risen as increased demand meets supply-chain snags. Key commodities have become increasingly difficult to obtain due to shipping delays, the national labor shortage, and severe droughts in key countries.

A global shipping-container shortage – which has about 5.5% of all freighters waiting weeks outside of ports to unload, including several key ports in southern California – has made it difficult to transport goods. The delays have put transportation costs at a premium, as companies compete for limited space on container ships and delivery trucks. Overseas transportation costs between Asia and the US have surged about 250% higher from this time last year, according to online freight marketplace Freightos.

Home Depot has even begun chartering its own container ships in an attempt to side-step rising coats and bring its products into the US faster.

shipping containers
A container cargo ship in Rotterdam Harbour on April 4, 2021 in the Netherlands. Rotterdam is the largest shipping port outside of Asia.

The US labor shortage is also hampering production and transportation, from a truck-driver shortage to restaurants and grocery stores scrambling to find workers. Many companies, including Chipotle and McDonalds, have hiked worker pay, while other companies have provided additional incentives to lure employees back to work. One Jersey Mike’s in California is offering up to $10,000 in hiring bonuses.

Major droughts in countries like Brazil and Argentina are also driving up prices for corn, coffee, and soybeans. Last month, Reuters reported Brazil was facing its worst drought in 91 years. A “megadrought” in California – the state responsible for over 25% of the nation’s food supply – is also expected to have some impact on food prices in the coming months.

Meat prices surged last week due to a ransomware attack on JBS, a supplier that processes about 20-25% of the nation’s beef, chicken, and pork products.

Consumer prices are at a 13-year-high, but they’re showing no signs of flagging. Executives from General Mills and Campbell Soup Company have warned they may be forced to raise prices further if supply-chain issues continue.

A Campbell spokesperson told Insider the entire food industry was experiencing inflation. “Campbell has a variety of tools to offset the inflationary environment, including pricing actions across most of our portfolio to reflect the broad-based increases in input costs.”

As companies continue to hike prices, experts say prices will only even out when the shipping crisis abates, but no one knows how long the upheaval will last.

Read the original article on Business Insider

From toilet paper to diapers, here’s a slew of household staples that are about to get more expensive

Stockpiling toilet paper
  • Several companies including Procter & Gamble and General Mills have announced price hikes.
  • The goods affected include paper products and baby-care items.
  • The prices of Coke products and coffee are likely to increase as port delays pinch the supply chain.
  • See more stories on Insider’s business page.

Many household goods are getting more expensive as companies like Procter & Gamble and General Mills announce price hikes to combat shortages and rising shipping costs.

During its third-quarter earnings call this week, P&G said it had started raising the prices of some of its goods, including baby-care and feminine-care products and adult diapers from its brands such as Pampers, Tampax, and Always.

“The exact amount of the price increase will vary by brand and sub-brand in the range of mid-to-high single-digit percentages and will go into effect in mid-September,” P&G said in a statement.

AP111207090833

Some of P&G’s primary competitors, including Kimberly-Clark, have announced similar price increases. In March, Kimberly-Clark said it would increase the prices of top products like Scott toilet paper and Huggies diapers.

General Mills’ chief financial officer, Kofi Bruce, said during the company’s March earnings call that it was planning to increase its prices to offset rising commodity costs as its margins continued to fall. While the company did not specify what products would be affected, General Mills’ lineup of brands includes Cheerios, Chex, Betty Crocker, and Pillsbury products.

On Monday, Coca-Cola CEO James Quincey told CNBC that the company was planning to hike its prices for the first time in over three years. Quincey did not specify the products that would be affected.

Quincey said Coca-Cola planned to implement the price hikes “intelligently, thinking through the way we use package sizes and really optimize the price points for consumers.”

Coffee prices are also set to skyrocket. Peet’s and J.M. Smucker, the brand behind Folgers and Dunkin’ coffee, have said they’re facing rising costs. Reuters reported that in February, port delays pushed coffee prices to their highest level in over a year.

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J.M. Smucker also increased the price of its Jif peanut-butter products in August.

Many of these companies said sales had continued to rise in the last quarter, even from the previous year, when some people were stockpiling products at the beginning of the pandemic. While an increase in demand can only be a positive for companies, demand is outstripping supply and driving up the price of some goods.

Consumer interest is rising as the products are getting increasingly difficult to obtain because of a shipping-container shortage and port congestion.

March data from the US Bureau of Labor Statistics’ Consumer Price Index indicated that as vaccination rates increase, prices go up. Consumer prices increased in 2021 over last year at their highest rate in three years.

While there has been a large increase in the price of gasoline, the cost of food, rental cars, and hotels have also pushed higher.

For products from the brands of top companies like P&G, people are likely to see inflated prices at the grocery store as demand compounds on vaccine optimism and port congestion shows no sign of clearing.

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The prices of corn, cotton, and wheat have surged more than 50% over the past year – and it’s driving up the cost of everything from Coca-Cola to diapers

2021 03 05T123827Z_3_LYNXMPEH240MQ_RTROPTP_4_GLOBAL MARKETS.JPG
  • Futures contracts for corn are up 96% over the past year. Cotton and wheat have jumped 54% and 50%.
  • Consumer-staple giants like Kimberly-Clark, Procter & Gamble, and General Mills are raising prices.
  • The Fed said on April 8 it wouldn’t allow a “substantial overshoot” of its inflation targets.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Commodity prices have soared over the past 12 months, and consumers are about to start feeling the effects.

Corn futures contracts are up 96% over the past year, while cotton and wheat futures contracts are up 54% and 50%, respectively.

Lumber is also on a tear, with prices rising over 265% in the past year to a record high of $1,326 per thousand board feet on Monday.

The meteoric rise for commodities is beginning to have an effect on consumer-staple companies. That’s leading them to pass rising costs on to consumers.

Coca-Cola CEO James Quincey told CNBC on Monday that his company would raise prices for its products because of the increasing costs associated with higher commodity prices.

Leaders in the consumer-staple sector, including Kimberly-Clark, J. M. Smucker, Procter & Gamble, and General Mills, have also said they will be raising prices because of increasing costs for raw goods.

Prices on most of Kimberly-Clark’s North American products are set to jump by mid-to-high single digits by the end of June, according to CNBC reports.

J. M. Smucker raised its peanut-butter prices in August. CEO Mark Smucker told analysts in November that “it was very clear that we were experiencing cost pressure.”

General Mills CEO Jeff Harmening told investors on a March 24 earnings call that his company would also raise prices in the coming months amid inflation pressures.

“So I would start by saying that inflation is very broad-based, and it’s actually global. So we are seeing it across the globe, and it’s broad-based across commodities, across logistics, across things like aluminum and steel,” Harmening said.

The CEO added that his company would “use all of the tools” at its disposal, including and “price and mix,” to offset costs.

Procter & Gamble announced on Tuesday in its fiscal third-quarter results that it planned to hike prices for baby care, feminine care, and adult-incontinence products in September to respond to higher commodity costs.

The rising price of commodities, and now of consumer goods, has some experts and US senators worried about inflation.

Sen. Rick Scott wrote a letter to the Federal Reserve Chair Jerome Powell in March raising concerns about rising inflation and the central bank’s bond-buying program.

Powell has said he plans to maintain “easy-money” policies despite rising inflation over the past few months, but Reuters reported Tuesday that Powell wrote in a letter to Scott that he wouldn’t allow a “substantial overshoot” of inflation targets.

“We do not seek inflation that substantially exceeds 2 percent, nor do we seek inflation above 2 percent for a prolonged period,” Powell said in a five-page response to Scott’s March 24 letter.

If Powell does decide to raise interest rates to curb inflation, some experts say the markets may not be ready for the results.

Mohamed El-Erian, the president of Queens’ College, Cambridge, and chief economic adviser at Allianz, told Bloomberg in an April 9 interview that the US economy was unprepared for an interest-rate shock.

Read the original article on Business Insider

From toilet paper to diapers, here’s a list of household staples that are about to get more expensive

Stockpiling toilet paper
  • Several companies including Procter & Gamble and General Mills have announced price hikes.
  • The goods most heavily impacted include paper products and baby-care items.
  • Coke products and coffee will see price increases as port delays continue to pinch the supply chain.
  • See more stories on Insider’s business page.

Many household goods are getting more expensive, as companies like Procter & Gamble and General Mills hike prices to combat shortages and rising shipping costs.

During their third-quarter earnings call, P&G said it has started raising prices on some of its paper goods, including baby-care, feminine hygiene products, and adult diapers. The price hike would encompass Pampers diapers, Charmin toilet paper, Tampax and Always feminine products, as well as Depends and Prevail adult products.

“The exact amount of the price increase will vary by brand and sub-brand in the range of mid-to-high single-digit percentages and will go into effect in mid-September,” P&G said in a statement.

AP111207090833

Some of P&G’s primary competitors, including Kimberly-Clark, have already announced similar price increases. In March, the company said it would implement a price increase for top products like Scott toilet paper and Huggies diapers.

Similarly, General Mills CFO Kofi Bruce said during the company’s March earnings call that it was planning to increase its prices to offset rising commodity costs as the company’s margins continue to fall. While the company did not specify what products would be impacted, General Mills’ line-up of brands includes Cheerios, Chex, Betty Crocker, and Pillsbury products, to name a few.

On Monday, Coca-Cola CEO James Quincey told CNBC the company is planning to hike its prices for the first time in over three years. Quincey did not say which beverages would be impacted by the price increases.

“We intend to manage those [the price hikes] intelligently, thinking through the way we use package sizes and really optimize the price points for consumers,” the CEO said.

Coke is not the only drink that will get more expensive in the coming months. Coffee prices are set to skyrocket. Peet’s and J.M. Smucker told CNBC in March that they are facing rising costs. Last month, port delays pushed coffee prices to their highest level in over a year.

AP101014139295

J.M. Smucker – the brand known for Folgers and Dunkin coffee – was one of the first companies to start hiking prices when it increased the price tag for its Jif peanut butter products in August.

Many of the companies including P&G and Coca-Cola saw sales continue to rise in the last quarter, even from the previous year when people were stockpiling products at the onset of the pandemic. While an increase in demand can only be a positive for companies, demand is outstripping supply and driving up the overall price of goods.

Consumer interest is rising at the same time the products themselves are getting increasingly difficult to obtain due to the shipping container shortage and port congestion.

March data from the US Bureau of Labor Statistics’ Consumer Price Index shows that as vaccination rates increase, prices continue to go up. Consumer prices increased in 2021 over last year at their highest rate in three years.

While gasoline prices have seen the largest increase, the cost of food, rental cars, and hotels has also pushed higher.

For top companies like P&G – that encompass everyday products and top brands like Tide, Gillette, Crest, Bounty, and Pantene – consumers will likely continue to see inflated prices at the grocery store, as demand compounds on vaccine optimism and port congestion shows no sign of clearing.

Read the original article on Business Insider