Small may be beautiful but it can also be deceptive

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Food in America is shrinking. Last month, Unilever’s Skippy brand peanut butter reduced the contents of a typical jar from 18oz to 16.3oz by increasing the depth of the indentation on the bottom of the plastic tub. It kept the price unchanged.

Kellogg has done the same thing with its Apple Jacks breakfast cereal: while the front panel size – and the price – remain the same, the contents have shrunk from 11oz to 8.7oz. Cans of Del Monte’s StarKist tuna now contain 5oz of fish rather than 6oz, while a redesigned bottle of PepsiCo’s Tropicana orange juice contains 89 fluid ounces compared with the previous 96 fl oz.

The food companies involved mostly blame the impact of rising commodity prices for what are in effect unit price increases being passed to the consumer, although a few creatively attribute content reductions to more “consumer friendly” packaging designs. “It is in effect raising the price, but it seemed to appeal to the consumer psyche, despite paying the same price but getting less,” says Pat Conroy, who heads the consumer goods practice at Deloitte & Touche USA.

For the companies, the results can be extremely positive. General Mills reduced the depth of packets of its leading breakfast cereals such as Cheerios while maintaining the dimensions of the front of the box and the price. As a result, the number of packs sold increased by 6 per cent, yet the weight sold was virtually unchanged from the previous year.

Ed Dworsky, the editor of Mouseprint.org, a website that tracks consumer issues, says the tactic, known as downsizing, is as old as the packaged goods industry itself and takes advantage of the fact that consumers are “price sensitive, but not net weight sensitive”. But over the past year, he says, the tactic has become increasingly prevalent, driven by soaring fuel prices – since downsizing also reduces transport costs per unit, adding to the savings from having less of the product in the pack.

“I can’t remember a time when I’ve seen this many major brands and this many categories involved in downsizing,” he says.

But not all the downsizing is under the radar. All the leading US liquid detergent brands have over the past year shifted to smaller, double concentrate versions of their products, in an environmentally focused initiative driven by pressure from Wal-Mart, the largest US retailer.

Kraft Foods has responded to growing economic pressure on its customers by introducing smaller “single serve” packages of some of its leading brands at lower prices – a strategy traditionally used by companies to drive sales in developing countries rather than in the US. It also delivers higher profit margins on each unit.

“There are many shoppers who are looking at the existing budgets, and they might be thinking, ‘I’d like to buy the larger detergent but I don’t have the money, so I’ll go for something smaller’,” says Ira Matathia, director of consulting at BrainReserve, a trend forecaster. The single-serve packages also follow a boom in small packages of snacks and sodas that has been driven by obesity and health concerns, after the success of the 100 calorie “snack pack” of cookies introduced by Kraft’s Nabisco in 2004.

Now Coca-Cola and PepsiCo both produce 100 calorie versions of their carbonated drinks, which are three-quarters of the size of their standard 12oz cans. That emulates the small-but-powerful can concept that has been popularised by energy drinks such as Red Bull.

Some of the present outbreak of shrinkage in food packaging is a direct result of a weakening economy. Mr Matathia and others argue, however, that it is playing out against the background of a broader trend – with concerns about issues such as sustainability and health leading towards a desire for greater simplicity and frugality.

In a new study on the “culture of the recession”, BrainReserve found that 84 per cent of the 1,011 adults surveyed reported they were “inclined to buy less stuff”, while 72 per cent “want to reduce clutter” in their lives. It had previously argued that 2008 would be a year in which consumers sought greater simplicity in their choices.

Sohrab Vossoughi, the founder of Ziba, a Portland, Oregon-based research and design firm, says his company has been forecasting the emergence of a “less is more” philosophy for some years. “The abundance economy is here and people have access to everything, as much as they want. But then they are asking, ‘Now what?’,” he says.

He cites as evidence a new housing development in downtown Portland that is marketing itself, with Ziba’s help, under the slogan “Buy Small”, arguing that its one-bedroom, European-scale 550 sq ft apartments are not only less expensive but also better for the environment. “It used to be that less is less, and now less is more. Large purchasing used to signify status; now small purchasing signifies status.”

Other indications of the taste for “less is more” include the decline in sales of sports utility vehicles and the Fresh & Easy “neighbourhood markets” opened in America by Tesco of the UK, which offer a highly edited selection of groceries in stores of less than 15,000 sq ft. The concept is being emulated by Wal-Mart, Safeway and other supermarkets.

American consumers have not relinquished their enthusiasm for giant-sized buckets of popcorn at the movies, for massive sky-scrapers or for king-size Snickers bars containing more than 500 calories. Mr Matathia also notes an economic counter-trend towards “big” – as consumers seek to save money and fuel by bulk-buying at warehouse discount clubs or concentrating all their shopping into one stop at a Wal-Mart Supercenter.

But beyond the downsizing tactics of consumer goods companies, or shoppers heading to their local 200,000 sq ft Wal-Mart, he argues that “you have the confluence of a bunch of cultural currents that are all in principle moving towards the idea of smaller. The prevailing social trend is that we are in a post-supersize-me environment.”

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