CPG shifts package sizes like currency

July 28, 2009

There’s a new currency in town: it’s called package content, and it fluctuates with the nation’s economic cycles.

There’s a new currency in town: it’s called package content, and it fluctuates with the nation’s economic cycles.

The issuers are consumer packaged goods manufacturers, which tells you much about their motives—not only to mask price hikes, but to develop new odd package sizes (12.6-oz. bags of chocolate candy, for instance) that defy easy price comparisons at the shelf. Yes, price-per-pound shelf stickers can tell a true tale if shoppers look at them, but once deals kick in promotional stickers can confuse even the most careful shoppers.

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. SupermarketGuru.com doesn’t think anyone is really fooled—least of all retailers—but at least this way a price hike comes across as more of a slap in the face than a solid right hook.

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.

Today’s strategies harken back to an earlier recession in the 1980s, when M&M’s successfully offset health and price concerns about candy by offering more product free in a package, and promoting that fact. To some degree, we are repeating history rather than charting a new (and much-needed) course in consumer-friendly pricing practices. After what the public has endured, being challenged more than necessary at the supermarket shelf is insulting and frustrating, especially when brands need to sustain demand more than ever.