50949_WKBW_7_Problem_Solvers_658x90.png

Actions

Democrats accuse Coca-Cola, Pepsi and General Mills of 'shrinkflation'

It's a practice where companies reduce product sizes or amounts while charging the same price to drive profits.
Biz Shortages
Posted

When you open a bag of chips you expect some air, but some companies have been increasing that amount of air.

It's a practice known as shrinkflation, and it has been a common way for companies to reduce product sizes while charging the same price or higher to drive profits. Now, two Democratic lawmakers are accusing three of the biggest companies of taking part in it in a letter sent out Monday.

The three companies listed: General Mills, PepsiCo, and Coca-Cola. Together, they control most of the U.S. soft drink and snack market and lawmakers are saying they're trying to make more with less.

"Not only are these package reductions saving companies a fortune, but they're costing consumers a fortune," said Jack Gillis, executive director at Consumer Federation of America.

RELATED STORY | Tide detergent box gets smaller, but is it really shrinkflation?

Take Doritos for example, which is owned by Frito Lay, and thus PepsiCo. In 2021, their bags started carrying five fewer chips. It might not seem like much, but according to a Times Magazine analysis, the move saved Frito Lay $50 million each year.

The letter accused General Mills of doing the same thing with Cocoa Puffs and Coca-Cola with its soft drinks.

"Basically, it's a sneaky way to pass on a price increase. They know consumers are price conscious and they'll definitely notice if the good goes up in price, but if they take out a little bit from each package they know consumers are not net weight conscious," said Edgar Dworsky, founder of Consumerworld.org.

The letter goes on to claim the companies have furthered their profits by paying less in taxes.

RELATED STORY | What is shrinkflation?

The lawmakers say from 2018 to 2022, Coca-Cola made $13.4 billion while paying an average effective tax rate of 13.5%. Meanwhile, General Mills made $12 billion while paying an average effective tax rate of 14.8%, and PepsiCo made $22.4 billion while paying an average effective tax rate of 15%.

All of the cited tax rates are lower than the 21% corporate tax rate that was reduced from 35% by President Trump in 2017.

"You're never going to see, look: new smaller size on the package. As long as they put the net weight or net content on the box, on the bag, they're complying with federal law," said Dworsky.

"The responsibility is truly on the shoulders of consumers. You can no longer go to the supermarket and just grab things off the shelves," added Gillis.

And experts say therein lies the solution: to look at the net weight to compare. So, instead of grabbing one bag of chips because it's listed at a cheaper price, calculate the price per ounce or gram to ensure you're getting the best deal.