November 29, 2022

A View from My Porch: Bumble Bee Economics 

Prologue:

Christina and I both grew up in homes that observed meatless Fridays, which lasted until the Second Vatican Council; after which Pope John XXIII, seeking to modernize the Church, enacted several reforms, which included an end to both Latin services and meatless Fridays.

However, in deference to Christina’s sense of nostalgia for life before the Vatican Council, we still occasionally have tuna melts for dinner on Fridays. I am glad that she is not nostalgic for creamed tuna and peas on toast, any variations of tuna casserole, or fish sticks. 

This essay is not about the popular recipes of the 1950s and 60s. Rather, I am reviewing an economic and retail commodities practice that emerged over the last few decades; and which really became evident to me when I realized that my tuna salad now required less mayo, diced celery, onion, and pickle relish per drained can of Bumble Bee tuna than it did in the past. 

Shrinkflation:

Some companies have reduced the size of their products in order to offset price increases that would have otherwise occurred as a result of inflation or increased production and materials costs. This practice, which crosses countries and industries, is referred to as “shrinkflation”, and was first labeled as such by economist and presidential advisor, Philippa Malmgren.

Accordingly, instead of substantially increasing the price of a product, which would be readily apparent to buyers, manufacturers reduce the size, but might maintain the original price and original “look and feel” on the store shelf.

In these cases, the retail price of the product might not increase, but the price per unit of weight or volume does. The phenomenon has become quite common in the food and beverage industries. Note that I use some recognizable brand names below as examples that illustrate this economic concept. However, I have no financial interest in any of them beyond that of a super market customer.  

Tuna School:  

There are two main varieties of tuna in grocery stores; “light” tuna, largely skipjack, and “white” tuna, primarily albacore; and both may be packed in either oil or water. According to the USDA, one-half cup of canned tuna in oil contains 145 calories, while a half cup in water has only 66 calories.

The “Daily Beast” reported in 2017 that “gone are the days of the six-ounce can of tuna, leaving buyers and sandwich lovers outraged.” Most brands are now 5 oz “net weight”, which actually includes the water or oil in which they are packed. Further, labels now indicate a “drained weight” of 4 oz in that 5 oz. can! 

According to the National Fisheries Institute, Americans eat about a billion pounds of canned and pouched tuna every year; about one-third of the world’s consumption; and so, these small weight reductions really add up. 

Coffee:

My parents probably included a “one pound” can of coffee on their shopping lists for brewing in their home percolator; — possibly “Maxwell House” or “Chase and Sanborn”.   With the exception of the occasional thermos-full, they probably consumed their “cuppa(s) joe” mostly at home. They did not enjoy the convenience or ambience of “Starbucks” or “Dunkins”. 

In 1993, American news commentator, Andy Rooney, continued his earlier investigation of the practices of “corporate coffee” and reported that, “in 1988 ‘Chock Full O’ Nuts’ had not only reduced the amount of coffee in their one pound can, but they’d also reduced the size of the print that indicated how much is inside.”

His 1993 update reported that “it’s now down to 13 ounces. If they’re not going to put a pound in it, they should at least use a smaller can.” He continued “Maxwell House still says it’s good to the last drop”. Maybe so, but there have been fewer and fewer drops over the years.” 

In a recent trip to our local super market, I noticed that both Maxwell House and Chase and Sanborn are now only 10.5 ounces.

Mr. Rooney is no longer with us.

The Ice Cream Chronicles:

Breyer’s, founded in 1866 in Philadelphia, is the oldest ice cream company in the United States. They incorporated in 1908, and remained  independent until their 1926 sale to the National Dairy Products Corporation/Sealtest, which became “Kraftco” in 1968; and eventually sold its ice cream brands to Unilever, the largest producer of soap in the world. 

Breyers downsized their half-gallons from 64 to 56 ounces, and then again, in 2008, to 48 ounces. They then went on to reformulate their products. Their new product is no longer even called “ice cream”, which is required by the USDA to contain at least 10 percent milk fat, but is now “frozen dairy dessert.” Breyers also removed their “all natural” from their cartons. Forty percent of Breyers’ production is now “frozen dairy dessert”. Many other ice cream producers have converted to 48-ounce cartons, and also offer frozen dairy desserts as an alternative to real ice cream. 

Of note, Ben Cohen and Jerry Greenfield still produce their ice cream in pint cartons that contain a full 16-ounces of ice cream. Their “New York Super Fudge Chunk” flavor is a staple in our house; and Christina will occasionally treat herself to a heaping teaspoon for dessert. 

Unfortunately, the Haagen Dazs “pint” is now 14 ounces.

Shrinkflation Innovation:

I believe that a little “sleight of Hand is required to make “shrinkflation” profitable for the manufacturer.  For example, if the “look and feel” of the downsized can of tuna bears a strong resemblance to the original 6 ounce can, you’re probably less likely to stop in the middle of the aisle and read the label. The new Breyers carton looks a lot like the original black half gallon carton. 

If you check the bottom of your peanut butter container, you’ll notice a dimple. The producers of Skippy peanut butter added a small indentation to the bottom of their jars in 2009. Originally 18 ounces, this subtle change reduced the weight to 16.3 ounces. The dimple was adopted by most manufactures of peanut butter.

Breakfast cereals have appeared to wax and wane by a few fractions over the past several years; and cereal boxes have changed dimensions. 

Companies did not change the height or width of the box, just made it thinner. Consequently, cereal boxes actually contain less cereal; but on the shelf, with the unchanged front panel facing out, they look the same.

Some Thoughts:

I guess that I can summarize this essay with “caveat emptor”, which is Latin for “let the buyer beware”.  As I recall, it’s the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. 

However, according to a Harvard study, most consumers would rather get less than pay more. In investigating this essay, I began reading the conclusions  of Edgar Dworsky, a consumer advocate and former assistant attorney general in Massachusetts,  who has documented shrinkflation on his “Consumer World” website for years.

Sources: 

  • Chernev, Alexander. “Customers Will Pay More for Less”. Harvard Business Review. 06/2012.
  • Dua, Shrey. “What Is Shrinkflation? 5 Examples in 2022”. 06/13/2022. Investor Place 
  • Dworsky, Edgar. “Consumer World Newsletter” Several Dates. 
  • Malmgren, Philippa. “Signals: How Everyday Signs Can Help Us Navigate the World’s Turbulent Economy”. Weidenfeld & Nicolson. (2016).
  • Rooney, Andy A “Pound of Coffee?” 03/09/ 2003. CBS “Sixty Minutes”.
  • Durbin, Dee-Ann. “No, you’re not imagining it — package sizes are shrinking” June 8, 2022. Associated Press.
  • Sherman, William. “Tuna Shrinkage: Cans Now Five Ounces, More Expensive”.  07/14/2017. The Daily Beast
  • Vosding, Adam. “Americans consume a whopping amount of canned tuna each year.” 02/24/2022. Mashed. com
Tom Gotowka

Editor’s Note: This is the opinion of Thomas D. Gotowka.

About the author: Tom Gotowka is a resident of Old Lyme, whose entire adult career has been in healthcare. He will sit on the Navy side at the Army/Navy football game. He always sit on the crimson side at any Harvard/Yale contest. He enjoys reading historic speeches and considers himself a scholar of the period from FDR through JFK. A child of AM Radio, he probably knows the lyrics of every rock and roll or folk song published since 1960. He hopes these experiences give readers a sense of what he believes “qualify” him to write this column.