Despite the fact that many people believe that the United States of America has some of the largest portion sizes in the world, others have begun to observe a significant reduction in the size of prepackaged goods.
It is impossible to find anything more relevant than the act of purchasing a bag of chips to consume on a Friday evening after a long workweek, while relaxing on the sofa and watching television.
On the other hand, when you open the bag, it is usually disheartening to discover that the majority of it is filled with air, and that only a third of it truly contains chips.
In recent times, it appears that the size of packaging is decreasing, and the contents are becoming even more depleted; nonetheless, the prices that Americans are paying are either the same as they were before or even more than they were before.
Unfortunately, it’s possible that this assumption is right.
The Shrinkflation Prevention Act was presented by Senator Bob Casey of Pennsylvania on February 28. The purpose of this legislation is to take action against large firms who provide fewer products per package without lowering their pricing. Companies who participate in these tactics are subject to the Federal Trade Commission’s ability to sanction them thanks to this statute.
According to Senator Casey, who made the announcement on the measure, “Corporations are trying to pull the wool over our eyes by lowering their products without decreasing their prices—anyone on a tight financial situation sees it every time they go to the grocery store.”
Research that was gathered by Senator Casey indicates that inflation rose by 14% between June 2020 and June 2022, but earnings for corporations surged by more than 74% within that same time period.
Furthermore, the profits of corporations were responsible for all of the inflation that occurred between July 2020 and July 2021, and forty-one percent of the inflation that occurred between July 2020 and July 2022.
Nevertheless, the costs of production have grown as a result of inflation, which has resulted in the ingredients and packaging materials being more expensive than they were in the past. This may be the reason why some corporations have opted to cut product size rather than increase pricing.
Senator Elizabeth Warren of Massachusetts, a Democrat, and Representative Madeleine Dean of Pennsylvania, a Republican, have also had enough of the reduction in the size of pre-packaged foods. They have expressed their dissatisfaction by writing a letter to Coca-Cola (KO), PepsiCo (PEP), and General Mills (GIS) on Sunday, requesting that the massive food and beverage corporations put an end to the phenomenon known as “shrinkflation.”
In order to enhance their profits, three of the largest food and beverage corporations in the United States are being accused by both senators of employing deceptive strategies. These strategies include lowering the size of their goods and offering less substance to their customers at the same price or even higher than they were before they downsized.
The food and beverage conglomerates were accused of supporting Trump’s 2017 tax package, which supported tax cuts, at the same time as Senator Warren and Representative Dean accused them of doing so because they intended to enhance their profits by raising prices.
Within five years of the tax reform measure that was passed in 2017, all three firms paid reduced taxes, which were significantly lower than the taxes that many average residents paid. This is according to the letter.
In 2017, General Mills generated earnings of $12 billion and paid an average tax rate of 14.8%. Coca-Cola had profits of $13.4 billion and paid around 13.5% in taxes. PesiCo made profits of $22.4 billion and paid tax rates of approximately 15%. These figures are revealed in the letter.
In the letter, Senator Warren and Representative Dean provided evidence to support their assertions by revealing the strategies, employed by the firms, that encourage’shrinkflation.’
In the year 2021, General Mills decreased the size of three different cereal boxes by a few ounces while maintaining the same pricing for each of the boxes. A mere few months later, the firm raised its pricing by a factor of five, resulting in customers having to pay more money for a product that included less of the original product.
Coca-Cola likewise joined the trend of downsizing by offering fewer bottle sizes of soda at the same price. PepsiCo, on the other hand, lowered the size of its 32-ounce Gatorade bottles to 28-ounce bottles and sold them at the same price.
According to NBC News, the letter that was sent to Ramon Laguarta, the chairman of PepsiCo, stated that “Shrinking the size of a product in order to fleece consumers on the price per ounce is not innovation; it is exploitation.”