Sunday, July 13, 2008

America's Shrinking Groceries

Soaring commodity and fuel prices are driving up costs for manufacturers; faced with a choice between raising prices (which consumers would surely notice) or quietly putting fewer ounces in the bag, carton or cup (which they generally don't) manufacturers are choosing the latter says KATE PICKERT in this informative article in TIME.

Some highlights from this article -
  • "People are just more sensitive to changes in price than changes in quantity," says Harvard Business School Professor John Gourville, who studies consumer decision-making. "Most people can tell you how much a box of cereal costs, but they have no clue how much is actually in it."
  • Most of the food manufacturers are not exactly going out of their way to let consumers know they're getting less for their money. Some claim newly shrunk products are responses to consumers' needs.
  • Tropicana told the New York Daily News earlier this month that its orange juice containers, which also include a newly designed cap and retail for the same price as the previous larger size, were the result of customer complaints. Said spokeswoman Jamie Stein, "We had a lot of spillage with our old products. It's a value-added redesign."
The Indian Context
The tough economic environment is forcing food manufacturers to stick to price and reduce quantity. But this article, though informative, still made me smile a bit. I thought the quantity reduction that's referred to in the article is what the provision stores in India did all the time
including altering the scales, using false/wrong weighing measures, etc. Ok, even if not all the time, atleast most of the time. The "value-added redesign" argument of Tropicana also made me laugh a bit. You give me less for the same price, say its for my benefit and then use big words like "value-added redesign"! May be, as Tropicana is being sold in India, they have learnt all our tricks and now deploying them effectively in USA!!