Mon, August 25, 2008

Incredible Shrinking Groceries

This first dawned on me a few weeks ago when I saw that Whole Foods was having a sale on our favorite premium ice cream.  When I went to the freezer case and pulled out a couple of half-gallons (or so I thought), I had a vague feeling that there was something odd about the package.  Was it a different design?  Well, maybe, but – there was something else.  Looking more closely, I noticed in the lower right corner: 1.5 quarts.

Huh?  Since when did ice cream stop coming in half-gallon packages?  My wife assures me that it’s been that way for a while, but obviously I haven’t been paying attention.

Then last week, I put kitchen garbage bags (75 per box) on the grocery list and Martha pointed out that we already had a new box, way in the back of the storage area.  The newer box was almost identical to the old one, except it was slightly shorter and had “68 bags” written on the side.  If you’re going to reduce the size, why 68 instead of 65?  I have no idea, but I’m sure the motivation for the reduction was to keep the consumer price of a box the same while reducing the manufacturer’s cost.  The psychology is pretty clear; you’re less likely to notice a 10% size reduction than a price increase.

In one sense, these shenanigans are nothing new – when “low fat” foods became popular, sellers of prepared foods reduced their portion sizes, and – voila – their offerings became low(er) fat foods.  The difference today is that the downsizing is in response to higher commodity and food costs.

I’ve noted previously that restaurants are developing techniques for serving smaller portions.  Fast-food vendors are in on this plot as well (et tu, Ronald?).  Burger King has begun test-marketing slimmed-down Whopper Juniors, McDonalds is experimenting with a reduced-cheese double cheeseburger, and Chuck E. Cheese’s has developed a new high-moisture mozzarella that spreads more when it melts and thus can be used in smaller amounts.

Maybe fast-food companies will start marketing these reduced-content offerings as a response to the growing obesity epidemic in the US.  The Robert Woods Johnson Foundation recently released a study showing that adult obesity is increasing in 37 states.  Massachusetts had the fourth-lowest obesity rate, which still puts us at 20.9%.  The report points out how bad this is for our general health, so maybe these increases will result in a nationwide reduction in caloric intake.  In the short term, food price increases will hit low-income households especially hard.

It seems that the high cost of food crops, especially corn and soybeans, is likely to continue in the near-term.  Along with high gas prices (think transportation costs), these increases take a toll on the cost of all kinds of food.  Catfish farmers in Mississippi are going out of business because they can’t afford feed costs.  A reduced supply probably means higher catfish prices.  The ex-catfish farmers will likely drain their ponds and plant soybeans and corn.

Egg prices have increased 40% in the last year, largely due to the increased cost of chicken feed.  There’s probably worse news ahead for lovers of omelettes:  egg prices are seasonal, peaking in the winter months when (apparently) egg consumption increases.

Alas, you can’t store eggs long-term, but it isn’t a bad idea to take advantage of sales on non-perishable items and stock up.  I think it will be several months (at least) before producer price increases have finished working their way through the food chain.


But wait, there’s more:  I was almost ready to “push the button” on this post when I noticed in David Merkel’s Aleph Blog a reference to an article from this past Saturday that I missed.  In the article, the Wall Street Journal described how major food manufacturers are cutting costs by making nips and tucks in their recipes.  For example, “Hershey Co. is substituting vegetable oil for a portion of the cocoa butter traditionally used in some of its chocolates. Spice maker McCormick & Co. is now supplying food companies with cheaper spices and new flavor blends, such as Mexican oregano instead of pricier Mediterranean oregano, and garlic concentrate instead of heavier (and costlier to ship) garlic cloves.”

Sellers of soy protein are seeing an uptick in their business; perhaps this means that the “mystery meat” of my youth is staging a move from school cafeterias to the frozen food aisle.

Whereas reductions in package size are something that one can spot with a little diligence, many will find recipe changes harder to detect.  Since major food processors purchase huge volumes of ingredients, a tweak of a few percent in an expensive ingredient can save them a lot of money.  There’s a risk for them, of course, that product loyalists will taste the difference and stage a rebellion.  Remember New Coke?

The article does mention an interesting development from Pittsburgh ketchup-and-pickle giant H.J. Heinz Co.  The company is trying to develop sweeter tomatoes in order to reduce the amount of high-fructose corn syrup needed to make its flagship product.  Less of the ubiquitous sweetener in the American diet can only be a good thing.

There’s no guarantee that these changes will result in better nutrition, of course.  If you worry about such things, you’ll want to keep a closer watch on the ingredient and nutritional information printed on prepared food packaging.