Shrinking Food Packages - KULR-8 Television, Billings, MT

Shrinking Food Packages

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BILLINGS - It seems like everything is getting more expensive. But companies might not want you to think that.

It costs more and more to produce food, which leads to higher prices at the grocery store. But to hide the increase, some companies are not raising prices, but shrinking package sizes.

You may have noticed when walking down the aisles of the grocery store, food prices may have gone up or what you're buying may be in a smaller package than before.

"Food prices have been going up, slightly," said Michael Stanley. "Proportions are getting smaller."

It might be hard to initially notice the difference, especially as each company's products come in different shapes and sizes. If you do a web search, you'll find many websites tracking the shrinking food packages, like Mouse Print and the Consumerist. Economists say companies pass down their cost increases to you.

"I think it really comes down to how elastic their market is which is all what elasticity is, which is how sensitive or responsive consumers are to change in price," said Scott Severance, a business and economics professor at Rocky Mountain College. "So if they're willing to pay more than a company can look at packaging the product as they always have and just kind of raise the price on it."

The other option is to change packaging for companies to maintain the same profit margin.

"It seems like in a bag of potato chips, there's more and more air in the bag, but the price is still the same on the package," Severance said. "That's probably a little more sensitive than the price of meat or the price of milk or the price of eggs, where they can kind of pass that cost along because they are considered staples."

"Packages have been shrinking for years," said James Alexander, a resident. "It used to be you could go into a store, get you a pound of potato chips. They were sixteen ounces. Not anymore, you're lucky to get 8 or 9."

Other changes can include changing the depth of the package, so the product looks the same on the shelves from the front.

"I think it's pretty shrewd on their part because they want to pay their stockholders and stay in business, make you think you still are getting a bargain for your money," Alexander said.

The US Department of Agriculture estimates retail food prices will rise as much as 3.5 percent this year. This past winter's cold and drought are contributing to the price increase.

"Beef prices have become a complete roller coaster," said Paul Gingerich, Lucky's Market meat and seafood director. "When we had the weather incident, it actually put a lot of pressure on cattle and cattle lost weight and we even lost a lot of cattle in this country. In addition to that, during that period of time, cattle couldn't get to market and so the market spiked dramatically."

There's also a global influence.

"One of the things that is also kind of interesting is that certain markets that were previously not open for certain types of products for example, beef, where there's now more demand from other countries for American beef and then that creates a shortage on our domestic markets," Severance said.

While food prices are rising, supermarkets like Lucky's say they are making a commitment to keep prices low"

"We really do check that our prices are comparable with anything else you're going to find in town," said Anne Costilla, Lucky's marketing and events coordinator. "We make sure that each week when we have our sales come out, we make sure that there is something you can plan a meal around that you can afford."

Severance said once prices do go up, they stick. "It would probably have to take a series of years, 5, 7, 10 years of decreased commodity prices for those prices to come back down," he said.

So either way, you'll be paying more, or just paying more for less. Here's one tip to help you: compare the unit price of the package size. This way you can see how much you're getting for your money.
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