Package size changes replace price adjustments

Over much of 2008 and 2009, CPG manufacturers imposed price hikes without being blunt about it, usually by shrinking the amount of food inside of cleverly designed boxes, bags, bottles and jars that don’t look much smaller than before, but often are.

To placate retailers who were demanding better value for their store image and their shoppers, many food suppliers deepened their promotional cuts and ran events more often—while refusing to budge on everyday baseline prices. Finally, after some major retailers grew private labels at brands’ expense and urged food brands to lower their prices to reflect recent drops in ingredients and transportation costs, there is some movement.

Not surprisingly, the movement is in snacks, not staples. And the movement’s mechanism is more package content, not lower dollars per package. Snacks are where shoppers have cut back purchases in attempts to protect their household budgets, so manufacturers in these categories are vulnerable.