Canada's Housing Bubble

May 4, 2011 Susan Semenak Postmedia News

Food packages hide reduced contents, higher prices

Honey, they shrank the yogurt. The margarine, the spaghetti sauce and the orange juice, too.

In an age of fierce retail competition and rising prices for basic commodities such as corn, wheat, cocoa and coffee, food companies are resorting to covert ways of passing their increased costs on to consumers. They have quietly shrunk the containers.

Taller and more slender, the new jar holds less sauce than the old jar, but doesn't look like it.

"In grocery stores and at other food vendors, consumers are getting less quantity for their money," says Sylvain Charlebois, associate dean of research and graduate studies at the University of Guelph, where he specializes in food distribution and food policy.

As Montreal consumer advocate Francois Decary-Gilardeau, of the non-profit consumer rights group Option Consommateurs, puts it: "Things are getting smaller all the time, but the prices never go down. It's not illegal, but it is deceptive and sneaky. Consumers have a right to know what they are getting for their money."

Downsizing, as it is known in the food business, is nothing new. Ten years ago, PepsiCo, which owns Frito-Lay, started putting fewer chips in each bag of Lay's and Doritos chips. Last year, when harsh winter weather decimated the orange crop in Florida, Tropicana (also owned by PepsiCo) downsized its 1.89-litre carton of orange juice to 1.75 L, leaving the price unchanged. Back in 2007, General Mills downsized 20 of its 23 breakfast cereals after prices rose for the wheat, corn and rice that go into those products. Soon enough, Kellogg's was doing the same.

Charlebois began his study of shrinking food packages last year, almost by accident. He and his wife were clearing house in preparation for a move when they discovered Cadbury Easter eggs they had hidden from their children several years earlier. The chocolates in the hidden stash seemed notably bigger, and Charlebois began comparing, weighing and measuring. What he found was that the chocolate Easter eggs had shrunk by 12.3 per cent in four years. He has looked at orange juice and yogurt containers and found similar shrinkage.

It's a well-known fact in marketing and consumer psychology that shoppers hate price increases. But we are less sensitive to changes in size and quantity, studies have repeatedly shown.

Indeed, most of us hardly notice when the jars, boxes and cartons of the foods we eat every day decrease in size. So instead of raising the dollar amount charged per package, manufacturers leave the price untouched but reduce the weight contained in the package.

This is what economists call a hidden price increase, and it is a widespread practice in the food business.

On the shelf at the supermarket, the new Tropicana cartons don't look much different from the old ones, even though they hold less juice.

Yogurt, which used to come in 750-gram containers, is now available mostly in slimmer 650-g containers.

As camouflage, the containers are often redesigned so the shrinkage isn't so obvious. When H.J. Heinz shrank its jars of ready-made Classico pasta sauce to 650 millilitres from 700 mL not long ago, it made the new jars taller, but narrower. Only if you were to see the old one and the new one side by side would you notice the difference, says Decary-Gilardeau, and even then it would be hard to tell which one holds more.

Ramen noodle cups halffull. Cereal boxes full of air. These are the kind of complaints Bruce Cran hears most from consumers. The president of the Ottawa-based Consumer Association of Canada always gives them the same advice: Be vigilant.

"You've got to always be doing the math, making proper price comparisons," he said. Never judge a book by its cover, the old saying goes. Well, don't judge a cookie by its box, either. The only reliable way to evaluate the price of an item is to calculate its unit price, Cran said.

John Scott, president of the Canadian Federation of Independent Grocers told the Business News Network earlier this month consumers need to be willing to assume their fair share of record commodity prices. North Americans pay less than almost anyone else in the world for their groceries. (The Canadian average is between 10 and 11 per cent of total household budget.)

Canada's major grocers have hinted recently that, after years of hiding price increases, they are about to openly raise sticker prices, especially on items such as bread, baked goods and pasta, given the skyrocketing price of wheat. Analysts say that by year's end, shoppers should expect to see a five to seven per cent jump in consumer food prices.

Decary-Gilardeau, strolling the aisles at his local store, points out the shrunk margarine and yogurt tubs.

"It's true, commodities prices are increasing, and consumers have to pay more as a result. But why can't the food companies be honest and tell it like it is instead of treating consumers like imbeciles who can be cheated without them even being aware of it?"