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After seeing chip sales decline amid “shrinkflation” charges, PepsiCo has been adding about 20% more chips to bags of Tostitos, Ruffles, and Doritos without raising prices.
On the company’s third-quarter analyst call, CEO Ramon Laguarta said PepsiCo is also adding two or three extra bags of chips to variety packs.
The moves, he said, "will be all additional value that I think will have a positive impact on the business in the coming months," especially as chip-eating occasions pick up with watch parties taking place around major college and professional football games.
"It's the football season," Laguarta said. "There's a lot of gatherings, and those brands belong very well in those gatherings."
Sales at Frito-Lay North America, PepsiCo's domestic snack-food division, were down 1% in the third quarter.
Although food inflation has cooled, grocery prices are up about 25% compared to 2019, according to the U.S. Bureau of Labor Statistics. As a result, consumers are still seen seeking out sales and discounts, switching to cheaper and generic brands, and buying fewer nonessential foods like chips.
Beyond value, the move is also seen as a response to the charges against PepsiCo over the controversial tactic of shrinkflation, which generally involves downsizing a package’s size but keeping the price the same.
In late 2023, Carrefour launched a "shrinkflation" campaign by sticking warnings on products in aisles, including PepsiCo products, that have shrunk in size but cost more.
By January, Carrefour removed numerous PepsiCo products due to escalating price increases in stores in France, Italy, Belgium, and Spain. Beyond chips, Quaker Oats, Lipton, and PepsiCo’s namesake soda were pulled. Price negotiations led to their return by early April.
On Oct. 7, two Democratic members of Congress, Sen. Elizabeth Warren and Rep. Madeleine Dean, sent letters to Laguarta as well as the CEOs of Coca-Cola and General Mills with concerns about shrinking products and corporate tax avoidance.
The congresswomen cited several examples, including PepsiCo's replacement of 32-ounce Gatorade bottles with 28-ounce bottles, but charging the same price, essentially "a 14% price increase," they wrote. Packaging changes were also called out for General Mills’ cereals and Coca-Cola’s sodas.
“Shrinking the size of a product in order to gouge consumers on the price per ounce is not innovation, it is exploitation,” the letter to Laguarta read.
PepsiCo has previously denied changing bottle sizes for profit. A spokesperson told CNBC in July that the 28-fluid-ounce bottle of Gatorade has existed for over a decade and that selling it more widely was part of the company’s long-term strategy, not a response to the current economic environment. Coca-Cola has explained that it sells smaller bottles as a way to offer lower price points to budget-conscious consumers.
According to Packaging Dive, options for smaller package sizes in recent years also reflect the desire of many consumers, particularly younger generations, for moderation and portion control for health reasons. Small pack sizes can also drive trials with new buyers.
A recent survey from LendingTree found that 71% of Americans report experiencing or noticing at least one incident of shrinkflation in the past year, with 57% noticing multiple incidents. Of those who've noticed shrinkflation, 82% said they feel deceived, and 66% stopped buying the offender's products because of it.