Pepsi Logo - © 2022 Pepsico

Breaking Point: Salty Snack Maker Admits ‘Shrinkflation’

It’s about time. And let this be both a lesson and an example for other snack and packaged food makers to heed! PepsoCo – owner of Lays, Ruffles, Tostitos, Doritos, Cheetos and other major snack brands – is ‘coming clean’ on shrinkflation…

Pepsi Snacks - © 2023 Dan Malovany

Today will stand as a truly memorable one in the history of salty snacks. The overarching ‘power’ in the Western world’s ‘chip’ market has admitted it’s been aggressively ‘shrinking’ its products while keeping prices up. And it’s going to do penance by ‘giving back’ to its worshipful fans…

Red handed

We guess the unceasing, ever-increasing consumer reaction over ‘shrinkflation’ finally became too much for PepsiCo to bear. It wasn’t the clamour or the social media din that did it, though. It was the fact that the snack and soda giant reported a decline in sales in its latest sales report.

PepsiCo – American’s largest snack maker – was first officially ‘caught red handed’ sneakily reducing the amount of product in its ‘standard sized-bags more than a decade ago.

Consumer protection lawyer and founder of the website Consumer World, Edgar Dworsky, has been tracking downsizing in many market segments for years.

Back in 2013, he reported that Ruffles shaved a half-ounce off the weight of its Sour Cream & Onion bag in 2013. In 2021, he found that Tostitos’ Hint of Guacamole flavour shrank from 12 to 11 ounces, while its Hint of Lime version dropped from 13 ounces to 11.

“It’s about time,”  Dworsky said of PepsiCo’s move to atone. “Chip lovers have suffered through years of downsizings.”

Numbers don’t lie

An analysis by the Bank of America revealed that dollar sales of snacks in the US declined by 0.5 percent in the third quarter of this year alone. And sales volume was down 1.1 percent for the same period. Pepsi was hit even harder. Its snack sales dropped a full 1 percent over the same period, and its snack volumes dropped 1.5 percent.

Meanwhile, the price per ounce of salty snacks has increased 36 percent compared to 2020, outpacing a 21 percent increase in overall grocery store prices, Robert Moskow, an analyst at TD Cowen, told CNN. Overall, the price per ounce of salty snacks has increased 36 percent compared to 2020, while overall grocery price inflation ran at just 21 percent for the same period.

The average price of 16-ounces of potato chips last month was (US)$6.46, up from (US)$5.02 in Sep-tember 2023, according to the US Bureau of Labor Statistics.

The Pepsi gesture…

In an unprecedented gesture aimed at winning back market share, Pepsi is mounting a very public campaign to demonstrate how sorry it is for it foisting shrinkflation on its fans.

PepsiCo, General Mills, Mondelez and other snack giants have all recently amped-up regular pro-motions, but that effort has been largely ineffective, according to Bank of America.

Now Pepsi is trumpeting a new initiative to offer material compensation to consumers by way of ‘Bonus’ bags containing up to 20 percent more chips at the same price as regular-sized bags have been selling for. For how long, the company’s statement didn’t say.

My take

Both the public acknowledgement of it shrinkflation sins, and the across-the-board Bonus Bag pro-motion place Pepsi’s snack brands positions head a shoulders, above the competition. At least for the moment. So far, no other salty snack makers have followed suit.

The CNN story also noted that snack lovers haven’t simply abandoned the big brands. Many have downgraded their salty-crunchy options to cheaper store brands and ‘discount labels’. If they had just stopped buying snacks, the numbers would be even darker for the industry as a whole.

Put that last point down to our natural addiction to salt, fat and sugar. Going off salty snacks ‘cold turkey’ would be a truly drastic move most folks don’t want to even contemplate.

~ Maggie J.

Leave a Reply

Your email address will not be published. Required fields are marked *