PepsiCo, the owner of popular snack brands such as Lay’s, Doritos, Tostitos, and Ruffles, is making changes to combat the phenomenon of shrinkflation, where products are downsized while prices remain the same or increase. In response to consumer complaints about smaller product sizes, PepsiCo will be increasing the amount of chips in some bags, offering 20% more chips in certain Tostitos and Ruffles bags for the same price as standard bags in select locations. Additionally, PepsiCo will be adding two additional small chip bags to its variety pack option with 18 bags. This move comes after years of shrinking bags of Tostitos, Ruffles, and other chip brands.
Consumer protection lawyer Edgar Dworsky, who closely monitors shrinkflation trends, has applauded PepsiCo’s decision to increase chip sizes, stating that chip lovers have endured years of downsizings. PepsiCo is the largest manufacturer of salty snacks in the United States, and its competitors are likely to follow suit by increasing sizes of their own products. This adjustment is aimed at winning back customers who have been buying fewer snacks due to rising inflation, with many consumers choosing to switch to cheaper private-label brands available at retailers like Walmart and Costco.
Inflation has significantly impacted snack prices, with the price per ounce of salty snacks increasing by 36% compared to 2020, outpacing the overall grocery store price increase of 21%. The average price of a 16-ounce bag of potato chips in September 2020 was $5.02, increasing to $6.46 in September 2021 according to the Bureau of Labor Statistics. Consumers and lawmakers have been vocal about their frustration with shrinkflation, with President Joe Biden and even the Cookie Monster raising concerns. In response to consumer backlash, companies such as PepsiCo, General Mills, and Mondelez have increased promotions to try to regain customer trust, but these efforts have been deemed ineffective by Bank of America analysts.
In an effort to combat shrinkflation and appeal to frustrated consumers, other companies like Domino’s have also made changes to their offerings. Domino’s recently introduced a limited-time offer called “Moreflation,” where customers who ordered two or more medium two-topping pizzas online could upgrade one of their pizzas to a large for free. The company’s finance chief Sandeep Reddy acknowledged that consumers are growing tired of smaller portions for the same price, highlighting the importance of addressing consumer concerns to maintain customer loyalty and satisfaction.
Overall, PepsiCo’s decision to increase chip sizes in response to consumer demand is a strategic move to combat shrinking product sizes amidst rising inflation. By offering more chips in certain bags and variety packs, PepsiCo aims to win back customers who have turned to cheaper alternative brands. The company’s initiative is part of a larger trend in the industry, as other companies are also responding to consumer frustration with shrinkflation by introducing promotions and deals to maintain customer satisfaction and loyalty.
