Ahh, summer is finally here. For those like me who live near Lake Michigan, it seems our summers, meaning those days of 80 degrees or more and sunny weather, only occur during the 62 combined days of July and August. And if we're really fortunate it may extend into September, too. Anyway, this doesn't leave much time for us to enjoy summertime treats like ice cream and watermelon. It's the former that is the subject of this story and as you will soon see, based on an incident I recently experienced, the classic half-gallon of ice cream is becoming a thing of the past, having been transformed into one of many pathetic examples of a larger shady marketing plot being fostered on American consumers.
Ice cream is one of the very few items for which I am willing to spend a premium. Plain strawberry or chocolate are mere sub-par flavors. No, what I need are exotic flavor combinations, so I was excited to see that my local mega mart was recently running a BOGOF special on all Spunky's flavors (see notes below). The regular price for a half-gallon is a little steep at $5.99 but like I said I'm willing to pay the price; getting two in a BOGOF sale was just dynamite! So I went and picked up two interesting flavors.
But when I got home and went to stick them in the freezer, I noticed something was wrong. There were still two partially eaten Spunky's in the freezer that I had bought last month. That wasn't the problem - I never wait until the ice cream is gone before buying more - what was wrong is the Spunky's I had just bought were smaller than the old ones. Looking closer, I observed that the length and height of the containers were about the same but the depth was significantly shorter. I got out a ruler and measured the actual sizes. Both containers are approximately 7 inches long by 5 inches high, but the new container is only approximately 4 inches deep whereas the old container is approximately 4.5 inches deep. Comparing the net volume information on their labels, the older container was a legitimate one-half gallon (64oz); however, the new ones are labeled as only 1.75 quarts (56oz).
WHAT THE HELL? Now I get less ice cream in a half-gallon size container? At least they are honest about not calling it a "half-gallon" anymore since it clearly isn't. The container designer was very clever with this size reduction subterfuge - the length and width didn't change, which means it's presentation in the freezer case still looked the same. But like the classic Hollywood Western movie set and its row of main street establishments, there was something missing around back.
A simple calculation shows that a reduction of 64oz to 56oz is -12.5%. Ignoring the BOGOF promotion for the moment, a half-gallon of Spunky's costs $5.99, which is approximately 9.4 cents per ounce. Since the new container is also $5.99 without the promotion, doing the math shows that the same ice cream in the spiffy new container costs 10.7 cents per ounce. That's an effective 14% PRICE INCREASE! Pretty slick, huh? Without actually raising the price for the container of ice cream, Spunky's just instantly boosted their revenue on this product by 14%.
If that isn't clear to you then think about this: the majority of the cost to produce ice cream or most any processed food for that matter is the cost of the raw ingredients, which are purchased in bulk on a cost per pound basis. When you buy the finished product, you buy it in a pre-measured container, NOT on a per-pound basis (notable exceptions are fresh produce such as potatoes and apples, but they aren't processed foods). It's the discretion of the producer as to how much to put in the package you buy. Thus, they have to spend on a per-pound basis to make ice cream, you have to pay on a per-container basis to buy it. This gives them lots of flexibility on just how to design the container.
Now wait a minute!, you may be thinking. My analysis neglects the BOGOF promotion, which should cut the price I'm paying per ounce in half, right? That's true, but only for the duration of the sale which typically last less than a week. Once the BOGOF sale is over, what's going to happen to the price? I can tell you right now there is no way in hell that the grocery store is going to reduce the regular price to lower than $5.99 just because the container is smaller. Nor is Spunky's going to revert back to their old half-gallon size container. Changes to containers are always costly initial investments due to retooling costs as all of the packaging machines have to be modified to handle the smaller containers.
What has happened is this: Spunky's has reduced the size of their "half-gallon" carton of ice cream, kept the price the same, and tried to fool you into thinking that nothing has changed.
I'm using Spunky's ice cream here just as an example of a trend that has been occurring in the processed foods industry for some time now, a trend that you have probably already noticed yourself. Essentially, what is happening is food manufacturers have found a new way to increase their revenues without raising the price on the shelf. To give you some more real examples, I investigated a few more products that I was suspicious of and found more craftiness. Listed below is a summary table of these products. Now, keep in mind that these are products that come in a container that is easily confused for the "classic" size. I deliberately avoided any product that were obviously smaller than the "classic" size. Also, these products were side-by-side with their "classic" cousins at the same retail price.
| EXAMPLES OF OTHER DECEPTIVE PRODUCT PACKAGING | ||||
| Product | Deceptive Package | Normal "Classic" Package | % less product | Explanation |
| butter spread | 15oz. tub | 16oz. tub | 6% | A normal size tub is 16oz. by weight, or one pound. These 15 ouncers are a tiny bit shorter than the 16oz. standard. |
| orange juice | 59oz. jug | 64oz. jug | 8% | A normal size jug is 64oz. or 2 quarts. These particular 59oz. jugs are styled differently from a typical 2 quart carton. |
| sugar | 4lb. bag | 5lb. bag | 20% | This one is marginally deceptive because the smaller bag is visually smaller; however, who wouldn't look for a 5lb. bag anyway? |
| whole wheat pasta | 13.25oz. box | 16oz. box | 17% | Now, this one was more expensive than the regular pasta, and the boxes were identical in size. |
| macaroni & cheese dinner | 5.5oz. box | 7.25oz. box | 24% | Technically, this wasn't a new package, just special shapes. But the packages were identical in size, so shouldn't the contents be equal weight? |
| bacon | 12oz. package | 16oz. package | 25% | Granted, these were special flavors like peppery, but the packages were identical in size. |
What is truly disturbing here is these package size or content reductions are clearly an attempt to cheat consumers. Food companies have offered new package size promotions before, but always with the intent to gain a market advantage with a smaller or larger portion size that consumers seemed to want, such as an individual serving or a "super" size portion for a large family. Such smaller or larger sizes were priced accordingly and the differences in sizes and relative costs were clearly obvious. You had no problem whatsoever distinguishing between the individual, regular, and jumbo bags of potato chips and their associated prices. These recent changes are nothing of that sort - they are intentionally obscure reductions in product size for the sole purpose of boosting revenue. The revised packages do not supplement the existing sizes and provide an alternative for purchase - they replace the older product size. Often the new package is introduced with a new label and logo design along with an accompanied advertising campaign. Slogans and jingles are built around a "same great taste in a new package" theme. But don't be fooled - the true purpose of the change is to effectively raise the price and the mechanism to do it is misleading.
Why the recent rash in reduced package sizes? Well, as far as I'm concerned they are being done because they are a very successful way to boost revenue without affecting the price on the shelf. There hasn't been enough backlash or negative response from consumers to stop it. And the reason for that comes down to the single most important theorem of modern marketing, Theorem #1:
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This isn't what you are going to hear on the record from business leaders or from marketing professors at hallowed business schools, but it is the truth. Some individuals are very smart buyers, many are savvy shoppers, but when you consider us all we are not very bright and the marketing brainiacs know that. Stupid because we will buy damn near anything if we are convinced we need to have it, lazy because we either don't care or don't want to spend the time to really look at what we are buying. And boy are we easy to convince. Case in point: bottled water. For God's sake, we Americans have access to fresh water from our faucets that is the envy of the rest of the world for quality. This is especially true here in the Chicago area where I live, right by Lake Michigan. I know this is a fact because I actually read the water quality test reports that our municipalities are required by law to obtain and publish from independent test labs. But we stupid consumers have been convinced we must have expensive bottled water, which is several more times expensive than gasoline, by the way. But this is a topic for another discussion.
Our laziness has given rise to some of the most ridiculous products we can spend money on. Things like pre-cooked bacon and pre-cooked spaghetti, both of which take less than 10 minutes to make the "old-fashioned" way. Now don't get me wrong - there are times when having convenience is justifiable and such choices shouldn't be designated as lazy actions. But it is our growing tendency to be lazy in situations where we shouldn't that gives marketers an additional opening to be deceptive. Referring again to the ice cream example, the shallower container isn't readily apparent in the display. If you just grab one without looking at it closely (which I did, being lazy), you won't notice the difference. A 12.5% reduction in volume is also a 12.5% reduction in weight which is impossible to judge accurately by hand. No, they are counting on you not noticing the difference until after you bought it, if at all.
This trend in package size reduction also represents reprehensible greed on the part of company management, focusing solely on short-term gains. Returning once again to Spunky's ice cream, by reducing the package size by 12.5%, revenues were boosted by 14%. We can safely assume that a lot of that extra revenue resulted in increased company profits, which looks well to the company shareholders on annual reports and ensures the CEO will keep his job. Now let's go forward in time. Spunky's competitors, seeing how successful their repackaging campaign was, decide to follow along, so within a few months everyone makes 56oz packages and the half-gallon size is history. But the shareholders have expectations for continuous increase in profits, and Spunky's has to act. They can't boost prices outright, otherwise they are more expensive than their competitors, so what should they do? Reduce the package size AGAIN? Another 12.5% reduction in size would mean a 51oz container. It won't take many iterations of this process before our former half-gallon of ice cream is now awfully close to a 32oz QUART. Just how thin would a quart package be? About 2.25 inches. Somehow I think that would be very hard to be unnoticeable. Reducing package sizes is not a viable long term solution to maintaining the financial health of the company.
Further to their shortsightedness is the fact that consumers become accustomed to how much value they receive from a given package size. We all have some feel for how many servings we can get from our favorite products. At some point it will become impossible to obtain enough servings from the smaller packages, forcing you to buy two at a time. ANY person would realize that having to buy two containers of ice cream to feed the family instead of the one you used to buy is just plain WRONG. If Spunky's is assuming we'll just blindly buy two containers without ever noticing the difference, thereby further boosting their revenue, then they are indeed idiots despite however many MBA's they may have running around.
And what is the endgame of this trend? Are milk and eggs next? When you go to the store will you pick up a 7/8ths gallon of milk and 11 eggs for your breakfast?. Or perhaps these marketing masterminds will target fresh produce next, giving us such absurd things as a "Value" bag of oranges that resembles the 10lb bag we usually buy, but only contains 9lb. Of course, the "Value" bag will certainly come with a flashy new label, perhaps with a bold colored stripe and appealing font choice for the word "Value" so it will be pleasing to the eye. To paraphrase the above theorem, appeal to the stupid and lazy American consumers.
For starters, being more observant at the store is definitely important, but that will hardly stop the trend from occurring. Perhaps better national exposure of this issue would help; however, I am not so na?ve as to believe that we Americans as a whole can become better shoppers, even if there were a national outrage over this issue. The best we can hope for is that any "national outrage" caused enough negative publicity as to poison this whole trend and induce a plethora of "classic" product size introductions. But, being pessimistic, they would probably come with a higher price anyway.
As for me, I am certainly not going to stop eating ice cream, but I will try to eat more of my other summertime favorite instead: watermelon. After all, they surely can't find a way to make a watermelon package smaller . . . Oh, No! Is NOTHING SACRED ?!?
Notes:
Spunky's ice cream is fictitious, but the pricing and volume information contained within is factual data I obtained on 28 July 2004 from legitimate brand names offered for sale. For further information, go to a store and look closely at what you are buying. Oh, and in case you haven't figured it out, BOGOF = buy one get one free.