Democrats go after shrinkflation, accusing giants of price gouging Americans
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Seven months after Cookie Monster decried shrinkflation on X, Sen. Elizabeth Warren (D-Mass.) and Rep. Madeleine Dean (D-Pa.) are probing cereal, beverage and snack makers about the practice of shrinking package sizes while keeping prices the same.
Why it matters: Coca-Cola, PepsiCo and other consumer packaged goods companies have employed the tactic over the past few years to squeeze better margins out of sales.
- It's gotten plenty of attention — French supermarket giant Carrefour even publicly shamed brands for the strategy.
Between the lines: In joint letters to the CEOs of Coca-Cola, PepsiCo and General Mills, the lawmakers accuse the companies of "price gouging" Americans who are already facing "challenging economic circumstances."
- They called out specific reports and public comments from the trio of firms that show smaller packages drove profits, including "Family Size" Cocoa Puffs cereal moving from 19.3 ounces to 18.1 ounces and Gatorade replacing its 32-ounce bottle with a 28-ounce version for the same price.
Representatives for the companies did not immediately respond to requests for comment.
Zoom out: Large consumer brands have been under pressure from multiple areas: a slowdown in population growth, inflation's impact on wallets and greater digital competition, a McKinsey report notes.
- The double whammy of the pandemic and inflation drove down margins for the first time after more than three decades of high performance.
The bottom line: Due to price hikes and shrinkflation, consumers as of last year were spending way more (10% more on groceries) but getting less (4% fewer items), McKinsey notes.
What we're watching: Skimpflation.
