Lawmakers Call on 3 Major Food Companies To Stop ‘Shrinkflation’

“Shrinkflation,” when a company reduces product size but keeps the price the same or higher, has been chewing into our favorite products for years. Companies that sell consumer goods such as paper products, snacks, and candy commonly use the pricing strategy to retain profit margins.

Now, it seems, U.S. lawmakers are insisting that three major food companies end the practice. Alleging they have been using shrinkflation to “gouge consumers,” Senator Elizabeth Warren and Representative Madeleine Dean sent sharp letters to General Mills, Coca-Cola, and PepsiCo demanding a stop to the “pattern of profiteering.”

According to the letter sent to General Mills, per NBC News, many cereal boxes got smaller in 2021, and subsequently, the company raised prices five times. Coca-Cola was accused of “selling less soda for the same price.” PepsiCo is reportedly now selling a 28-fluid-ounce Gatorade bottle that was once 32 ounces without a change in price.

“People have noticed that their box of Cheerios and bag of Doritos are smaller, but prices are higher — and at the same time these giant corporations are paying lower tax rates than the average American,” Warren said in a statement to NBC News.

General Mills, Coca-Cola, and PepsiCo have not yet publicly commented on the letters.

Shrinkflation Is Real

When inflation pushes the price of materials and ingredients up, companies look for ways to pass the expenses to consumers. Choosing to change product packaging to reduce costs rather than raise prices disguises the fact that consumers are getting less for the same money.

“Final price increases draw much bigger backlash than volume decreases,” said Nailya Ordabayeva, an associate professor of marketing at the Boston University Questrom School of Business, according to NBC News. “So, between the two evils, the downsizing becomes a preferred option.”

Earlier this year, Senator Bob Casey introduced a bill designed to help with increased costs of consumer goods. Named the Shrinkflation Prevention Act, the legislation focuses on recognizing the practice and grants the Federal Trade Commission power to take action against companies that utilize it.

Accounting for shrinkflation, snacks have increased about 26% from January 2019 to October 2023, per statistics provided by Senator Casey’s office. About 10% of that increase is directly related to shrinkflation. Significant increases in household paper products, coffee, and frozen food were also noted in the same period.

Shrinkflation appears to be real and is reportedly adversely affecting the pocketbooks of American families. As a result, lawmakers are looking more closely at pricing strategies that potentially hurt the economy as well as Americans already struggling to make ends meet.