October 7, 2024
NBC News recently published an article featuring Nailya Ordabayeva, Associate Professor in Marketing, discussing how major food and beverage companies, including General Mills, Coca-Cola, and PepsiCo, are engaging in “shrinkflation.” This practice involves reducing product sizes while maintaining or increasing prices.
Sen. Elizabeth Warren of Massachusetts and Rep. Madeleine Dean of Pennsylvania accused these companies of profiteering and dodging taxes, citing specific examples of downsized products. However, experts note that for manufacturers aiming to increase profits, shrinking product sizes is often viewed as a more favorable strategy than raising prices.
“Final price increases draw much bigger backlash than volume decreases. So, between the two evils, the downsizing becomes a preferred option,” Ordabayeva adds.
Despite industry defenses citing inflationary pressures, Warren and Dean are demanding transparency on pricing and tax contributions from these companies, asserting that consumers should not bear the burden of rising costs.
