Money Rehab with Nicole Lapin - Why Are My Snacks Half-Empty When I Buy Them?!

Episode Date: September 14, 2021

We bet this has happened to you: you’re treating yourself with your go-to bodega snack, you open the bag and… it’s practically finished, before you even started. It’s not your imagination, and it’s not an accident. Today, Nicole reveals the sneaky move companies are making to get you to pay more for less. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Okay, money rehabbers, here's today's question.

Does size matter? Or let me be more specific. Does the size of a product matter? Get your hat out of the gutter. When it comes to how much you pay for it, the answer is pretty obvious, right? It's a resounding yes. So then why are we getting less for what we're spending? Let me describe a scenario I'm sure has happened to you. You're treating yourself with your go-to bodega snack. Yes, everyone has one. And you open the bag and it's practically finished before you even started. No, it's not your

imagination. There are less chips in your snack bag from that bodega store. It's actually an intentional move by our beloved snack companies. So intentional, in fact, that it has a name, shrinkflation. Shrinkflation is a phenomenon that happens when the cost of goods goes up, so companies try to offset the cost by shrinking the product. Let's use the chips example again. For easy math, let's say that a snack company sells a bag of chips for five bucks, and in order to fill a bag of chips, they need to buy one dollar's worth of potatoes. That would mean the snack company's profit is four bucks a bag, right? The price of the bag minus the cost of goods leaves you with four dollars of money coming in for the company.

That's a pretty prime profit margin. If the price of potatoes rises, though, a potato chip company is going to need to spend more to get all of the potatoes they need to make their product, right? Let's say the price of potatoes now rises to two bucks. That would mean that the profit from the $5 bag went from $4 to $3. That price difference really adds up over time. So the snack company is stuck. No company under any circumstances wants their profits to go down. So to keep their profit the same, the snack company could either raise their price to $6 a bag so they still get a $4 profit margin, or they could still buy $1 worth of potatoes, which would mean that they would get half the amount of potatoes they used to receive before the price went up. Consequently,

with half the amount of potatoes to work with, the snack company is going to need to put half the amount of potato chips in each bag, but will keep the $5 price tag. In other words, if a company wants to keep their margins the same in the face of higher costs of goods, they need to either raise the price to compensate for their increased costs or keep the sticker price the same but deliver less. Even though it seems like a more complicated solution, with shrinkflation, companies are now choosing the latter strategy. The rationale is that you,

the consumer, may not notice how much your favorite treat weighs, but you certainly notice how much it costs. So companies hope that they can pull one over on us consumers by sneaking slightly smaller packages onto our shelves or filling the box with just a little bit less. And are they right? Does it work? Honestly, yes. Do you know how much a bag of your favorite chips weighs? Would you even notice a difference on the label? If you're like me, probably not. You'll need to wait until you've bought the bag, open the bag, and then realize there's half the amount of chips in the bag that you were expecting. I'm an optimist. But when it comes to snacks, if there's only half the amount of chips in a bag, that bag is half empty, not half full. There are some pretty

big shrinkflation offenders I'd recommend keeping an eye out for. I'll give you a warning. They're not products that you'll want to see on the naughty list. I'll give you a second warning. This is a game of ounces. I know that we typically think of ounces as teeny tiny and negligible, but they're not. Going back to our trusty potato chip example, oftentimes a serving is one ounce or around 18 chips. So even though one ounce sounds small, chips are light. That's how we justify eating so many of them. Anyway, here are the big offenders. Number one. Cereals.

General Mills, the company that makes Cheerios, Lucky Charms, Cinnamon Toast Crunch, and many other big name cereal brands, shrank its family size boxes by just over an ounce while keeping the price the same. Again, I know that might not seem like a lot, but think about how light a box of cereal is. You're getting about 5% less for the very same price. Number two, household goods. From value paper towels to hefty trash bags, household goods are being shrink-flated. There are some companies that are opting for price increases. Kimberly-Clark has raised prices on Scott Toilet Paper,

Huggies Diapers, and other goods by anywhere between 4% to 9%. Similarly, Pampers Diapers and Tampax Tampons prices are set to go up this month. Number three, potato chips. Yep, my example before was not made up. It's real. The weight of Dorito products went down half an ounce and different Pringles flavors are different weights, but all cost the same. 5.5 ounces of barbecue Pringles, $1.53. 5.2 ounces of original Pringles, also $1.53. Number four, chocolate. I know, I told you you wouldn't like this very much. But yes, we're now getting less chocolate for the same price. And here on Money Rehab, we want more chocolate, not less. Hershey's, for example, is slimming down its chocolate kisses. And Reese's

has also dropped some weight from the fan favorite peanut butter cups. Number five. Ice cream. Ice cream, you scream, we all scream for shrinkflation? Not so much. Tillamook ice cream reduced its size of ice cream containers from 56 ounces to 48 ounces while keeping the $16 price tag. That's almost a 20% reduction, though, of ice cream. I don't like it. And neither do you, especially when you need it most after a shitty day. Here's today's tip you can take straight to the bank. Buy your household goods in bulk now. All signs point to products being shrink-flated throughout the fall and winter. So get the most bang for your buck and go shopping sooner than later. Do it now so you can take out shrinkflation with the trash.

Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team, Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself

so that you can get it together and get it all.