Lay’s, Doritos, Tostitos and Ruffles chips will put more chips in some bags
In a bid to regain customer loyalty, PepsiCo, the powerhouse behind beloved snack brands such as Lay’s, Doritos, Tostitos, and Ruffles, is reversing a controversial trend known as shrinkflation. The company has announced that it will increase the chip content in certain bags, responding to consumer frustration over downsized products and rising prices.
Understanding Shrinkflation
Shrinkflation occurs when manufacturers reduce the size or quantity of a product while maintaining its price, a tactic that has drawn ire from consumers. Over recent years, many familiar products have undergone these changes, leading to a growing sense of discontent. For example, Tostitos’ “Guacamole” flavor was reduced from 12 ounces to 11 ounces, and Ruffles’ “Sour Cream & Onion” bag was trimmed by half an ounce back in 2013. As consumers became more aware of these adjustments, many expressed their displeasure, often opting for cheaper alternatives or abandoning products altogether.
PepsiCo’s New Strategy
PepsiCo’s latest initiative includes the introduction of “bonus” bags for Tostitos and Ruffles, which will now contain 20% more chips at no additional cost in select locations. The company is also enhancing its variety packs by adding two additional small bags to an 18-count option, aiming to offer consumers more value during challenging economic times. “Chip lovers have suffered through years of downsizings,” said consumer advocate Roni Dworsky, commending PepsiCo’s efforts to increase bag sizes.
The Financial Landscape
This strategic shift comes in response to a broader trend of declining snack sales. According to recent data from Bank of America, snack sales dropped by 0.5% during the third quarter of 2024 compared to the previous year, with retail snack volumes declining 1.1%. PepsiCo reported a 1% decline in snack sales and a 1.5% drop in volumes during the same period.
Rising costs have significantly impacted consumer behavior. The price of salty snacks has surged 36% since 2020, exceeding the 21% increase in overall grocery prices. In September 2024, the average price for a 16-ounce bag of potato chips reached $6.46, up from $5.02 in September 2020, according to the Bureau of Labor Statistics.
Growing Consumer Discontent
The backlash against shrinkflation has garnered attention from consumers and lawmakers alike. High-profile figures, including President Joe Biden, have criticized companies for reducing product sizes while raising prices. This scrutiny has pressured major brands like PepsiCo, General Mills, and Mondelez to rethink their pricing strategies and engage more transparently with their customers.
Promotional efforts aimed at winning back consumer trust have had mixed results. Bank of America reported that these marketing strategies have not effectively countered the negative perceptions surrounding shrinkflation. In a creative response, Domino’s recently launched a promotion called “Moreflation,” which allows customers who order two or more medium pizzas to upgrade one to a large for free.
The Road Ahead
PepsiCo’s decision to increase chip quantities signals a broader potential shift in the snack industry as companies grapple with consumer backlash against shrinkflation. The success of these initiatives will depend on the company’s ability to rebuild trust with its customers and demonstrate a genuine commitment to value.
As the landscape of consumer preferences continues to evolve, it remains to be seen whether PepsiCo’s adjustments will resonate with shoppers who have grown weary of rising prices and shrinking products. The pressure to adapt is mounting, and other snack manufacturers may soon feel compelled to follow suit to retain their customer base in this competitive market.