It's true: Food packages shrunk last year

John Schafer wore a pained expression as he stepped back from the snack food display at a Minneapolis grocery store.

He held two bags of Old Dutch Puffcorn, each costing $2. Yet one weighed 10 ounces and the other 9 ounces.

He studied the bags carefully. "I suppose this one is a little bit shorter and flatter," said Schafer, 50, a computer programmer. "But they did a heckuva job disguising it."

In the past year, thousands of small, almost imperceptible changes swept through the grocery aisles where American families shop each day.

The indented bottom of a Skippy peanut butter jar got more indented, turning an 18-ounce jar into a 16.3-ounce one. Ice cream containers shrank by one-quarter of a quart. And for breakfast, a jug of Tropicana orange juice got 7 ounces lighter while that box of Froot Loops lost more than 2 ounces.

Shoppers without a keen eye and a willingness to read the fine print on labels might have missed what has happened: Food manufacturers were downsizing packages, while keeping prices the same, as they passed on higher food costs to consumers.

According to a recent analysis by Nielsen Co., about 30 percent of all packaged goods have lost content over the past year. This at a time when U.S. grocery bills are rising -- up 7.5 percent in October vs. the same month a year ago -- at the fastest rate in 18 years.

"It's become a game," said Susan Broniarczyk, a professor of marketing at the University of Texas at Austin. "How far can you go in reducing the size of a package while flying under the consumers' radar screen."

What began as a response to rising fuel and ingredient costs has become institutionalized at many companies. At General Mills, for example, cost-cutting is so embedded that the company even has its own intimidating term for it: "Holistic Margin Management."

It's not always about shrinking packages, which can account for as much as 75 percent of a product's cost. Even seemingly small changes in a package's design can mean millions of dollars in annual savings -- lessening pressure to raise prices to cover costs.

"This is very new thinking for our industry," said General Mills CEO Ken Powell. "We have an enormous percentage of our organization now looking for ways to eliminate basically what is waste."

There is an entire science behind packaging reductions, enlightened by a long list of unsuccessful changes.

"There is only so much change consumers are willing to accept," said Dan Ariely, a Duke University economist and author of "Predictably Irrational," a book about how people make decisions.

For instance, food manufacturers know consumers react more to changes in height than width, so cereal boxes often get thinner before they get shorter, Ariely said.

Once a product changes, buyers often forget the previous size, creating a new standard. Five years ago, ice cream tubs were a half-gallon, or 2 quarts; few noticed when it dwindled to 1.75 quarts and then, this past year, to 1.5 quarts.

However, many shoppers have a vague feeling that food items are getting smaller.

Even the trusty milk jug is no longer safe. In September, Kemps LLC introduced a 94-ounce milk jug that is 2-ounces shy of three-fourths of a gallon. The company said it was responding to the growing number of empty nesters, who with kids gone, no longer want a full gallon. And it was trying to price milk at lower levels, as costs rose into the summer.

The average price of a gallon of milk hit $3.96 in July, up nearly 50 percent from five years ago.

When PepsiCo reduced the size of its Tropicana orange juice jug by 7 ounces, it touted the container's "new ergonomic design" and easy-to-open snap cap. Yet consumer advocates argued the new features were really meant to distract from the reduced weight.

"This is the packaging equivalent of three-card monte," said Ben Popken, editor of Consumerist.com, a website whose "Grocery Shrink Ray" tracks shrinking packages. "By changing several factors at the same time, food companies disguise the fact that you're getting less for the same price."

At General Mills, with more than 1,000 products and annual sales of $13.7 billion, everyone from factory-floor workers to brand marketers is encouraged to come up with ways to pare packaging costs. Tiny improvements, such as a thinner lid on Progresso soup cans, which saved nearly 360 tons of steel a year, are celebrated.