PepsiCo is unshrinking shrinkflation.
The owner of Lay’s, Doritos, Tostitos and Ruffles chips will put more chips in some bags to claw back customers tired of higher prices with skimpier bags. Shoppers have balked at downsized chips, cookies, paper towels and other products, widely known as shrinkflation, and turned to cheaper options or stopped buying altogether.
A PepsiCo spokesperson told CNN that Tostitos and Ruffles “bonus” bags will contain 20% more chips for the same price as standard bags in select locations. PepsiCo is also adding two additional small chip bags to its variety-pack option with 18 bags, the spokesperson said.
“It’s?the?football?season.?There’s?a?lot?of?gatherings,” PepsiCo CEO Ramon Laguarta said on an earnings call last week.
It’s a reversal of years of shrinking bags of Tostitos, Ruffles and other chip brands.
In 2021, Edgar Dworsky, a consumer protection lawyer and founder of the website Consumer World, who meticulously tracks shrinkflation, found that Tostitos’ “Hint of Guacamole” version shrank by one ounce from 12 to 11 ounces, while its “Hint of Lime” version dropped from 13 ounces to 11. Dworsky also found that Ruffles shaved off a half-ounce to a “Sour Cream & Onion” bag in 2013.
“It’s about time,” Dworsky said of PepsiCo’s move. “Chip lovers have suffered through years of downsizings.”
PepsiCo is the largest manufacturer of salty snacks in the United States, and its competitors are likely to follow its lead with increased sizes of their own, Robert Moskow, an analyst at TD Cowen, told CNN.
Higher prices, lower sales
PepsiCo is making these changes because consumers, strained by a run-up in inflation, have been buying fewer snacks. When they do, they often switch from pricier big brands like Tostitos to Walmart, Costco and other retailers’ private-label brands.
During the third quarter of 2024, snack sales declined 0.5% from the same period a year ago, and retail snack volumes declined by 1.1%, according to research by Bank of America analysts.
PepsiCo’s snack sales dropped 1% last quarter and its snack volumes dropped 1.5%.
Snack prices have gone up more rapidly than other store items.
The price per ounce of salty snacks has increased 36% compared to 2020, outpacing a 21% increase in overall grocery store prices, Moskow said.
The average price of 16-ounce potato chips in September was $6.46. In September 2020, the average price was $5.02,?according to the Bureau of Labor Statistics.
Consumers and lawmakers in recent years have also protested companies downsizing products while simultaneously raising prices. Everyone from?President Joe Biden?to the?Cookie Monster?has complained about shrinkflation.
PepsiCo, General Mills, Mondelez and other snack giants have ramped up promotions to try to win back customers, but the promotions have been ineffective, according to Bank of America.
Other companies are also trying to respond to consumers’ frustration with shrinkflation.
Domino’s last month offered a limited-time deal called “Moreflation.” Online customers who ordered two or more medium two-topping pizzas could upgrade one of their pizzas to a large for free.
“Consumers are getting fed up of actually seeing a smaller portion for the same price,” Domino’s finance chief Sandeep Reddy said on an earnings call last month.
