By Emily Fredrix
Your eyes are not deceiving you in the grocery store. Yes, your bag of Doritos just got bigger. No, the price didn't change.
Last year, food packages shrank as food makers, dealing with record high ingredient costs, struggled to maintain their profits. But the weakened economy has caused a slump in demand for ingredients such as corn and oil, pushing those prices back down. With lower ingredient costs – and higher consumer demand for more value – some brands like Frito-Lay are shifting back to bigger packages, without raising prices.
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Think of your food packages like an economic barometer: Times are tough, so costs are low and packages are bigger. When times are good, costs are high and packages, to compensate, get smaller.
Q: What's getting bigger?
So far, the most evident size boosting is in the chip aisle, where Frito-Lay dominates. The company has boosted some package sizes for brands by 20 percent, reversing cuts made to bag sizes last year. Certain Doritos flavors have gone from 12 ounces back to 14.5 ounces, while Fritos bags are now 17.5 ounces, up from 14.5 ounces, and Cheetos are 10.25 ounces, up from 8.5 ounces. Tostitos are now 15.625 ounces, from 13 ounces. The pricing was unchanged, ranging from $2.89 to $3.99.
Q: Why are companies making products bigger again?
Because they can, and because consumers want it.
Prices for ingredients have moderated from record highs last year. So it costs these companies less to make your food, and they can afford to give you more product for the same price.
It doesn't cost too much extra for them since these products are produced in mass quantities. And it's considered a good investment, since it boosts the amount they're selling and can increase their market share – two things investors like.
Consumers are also asking for it as they look to save money.
Offering more for the same price is one way brands can promote themselves as they compete with store-brand alternatives, which cost less and are gaining sales in some categories at the expense of branded products.
Increasing package sizes also keeps pricing and sales volume steady so revenue doesn't suffer, as can happen from other promotions – like coupons.
Q: Why not just cut the prices?
It's not that simple, pricing experts say. Once prices are lowered, it becomes very difficult to raise them, since consumers may react negatively to that.
Instead, companies can give people more for the same amount of money, making for a per-ounce price cut, but leaving prices unchanged. That means food makers protect their pricing for the future, so they can react when commodity prices go back up – something experts agree will happen as the economy recovers.