00:00:00
Speaker 1: Stacey Vanek-Smith here from Everybody's Business. Today we are sharing an episode from The Big Take, which is one of our very favorite Bloomberg podcasts. This episode is about skimflation, which is when a product or service drops in quality, but the price remains the same. Max and I will be back with a new episode of Everybody's Business on Friday.
00:00:23
Speaker 2: Bloomberg Audio Studios. Podcasts.
00:00:27
Speaker 3: Radio. News.
00:00:29
Speaker 1: So I read you've been eating peanut butter cups quite frequently since you were a kid.
00:00:34
Speaker 2: Oh, yeah, I love them. I mean, it's absolutely, people say it's the crack cocaine of candy.
00:00:40
Speaker 1: This is Brad Reese. And if you haven't already guessed, he is a big fan of Reese's peanut butter cups. But he's not just a fan.
00:00:49
Speaker 4: My dad was Charles Richard Reese, who was the youngest of the 16 children of H.B.
00:00:56
Speaker 2: Reese, the inventor of Reese's.
00:00:59
Speaker 1: And Brad leans into that candy lineage hard. Sometimes he wears a bright orange Reese's branded racing jacket in public. And people notice.
00:01:09
Speaker 4: It's like being a celebrity, but without the hassle of being a celebrity.
00:01:13
Speaker 2: And what I mean by that is I can turn the light switch on or turn the light switch off.
00:01:18
Speaker 4: How do I turn it on?
00:01:20
Speaker 2: I put something on that says Reese's.
00:01:22
Speaker 1: Brad understands what makes a Reese's peanut butter cup special, too. That smooth chocolate taste, those little ridges that give way to the creamy peanut butter center. But lately, Brad's relationship with the brand has gotten more complicated. Reese's was bought by Hershey back in 1963. And in the years since, Brad says he's found himself time and time again unwrapping a peanut butter cup, taking a bite.
00:01:47
Speaker 2: And I'd say something's not right.
00:01:48
Speaker 1: But was Brad's hunch just a hunch? From chocolate bars to margarine, a lot of beloved brands have been quietly swapping out ingredients for less expensive substitutes as they grapple with surging costs. It's a practice NPR reporter Greg Rosalski calls skimflation.
00:02:06
Speaker 2: An anonymous survey of 300 large food and beverage brands showed that nearly two-thirds of them reformulated at least six recipes.
00:02:14
Speaker 3: Probably a lot of products that used to have 100% olive oil or mostly olive oil probably now have more of a blend.
00:02:19
Speaker 4: I think manufacturers forever have fiddled with the formulas and formulations of their products. Has it always been for the good? You know, maybe as costs go up, it hasn't been.
00:02:32
Speaker 1: That's Edgar Dwarski, a consumer advocate who runs the watchdog website ConsumerWorld.org. And he's been digging into the question, what happens when companies tinker with the recipes of their beloved consumer products to cut costs?
00:02:46
Speaker 4: Consumers aren't in the habit of memorizing the ingredients list. You're making an assumption that it's still the same as what it was. But you can't assume that anymore.
00:03:01
Speaker 1: I'm Stacey Mannix-Smith, in for David Gurra and Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, could skinflation be the biggest consumer grift out there? And What happens when consumers notice the difference in their favorite products? When inflation is high, it puts pressure on both consumers and companies to find ways to cut costs. That has led to a couple of trends. One is called shrinkflation. That is when companies sell less of their product but charge a similar price. President Biden actually called out this practice in a video back in 2024. It's a ripoff.
00:03:41
Speaker 3: Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won't notice. Give me a break.
00:03:49
Speaker 1: President Trump made his own demonstration of the trend by holding up two different sizes of Tic Tac containers at a campaign rally that same year.
00:03:57
Speaker 2: This is inflation.
00:04:00
Speaker 4: This is Tic Tac.
00:04:01
Speaker 3: This is Tic Tac.
00:04:02
Speaker 2: This is inflation.
00:04:03
Speaker 4: This is what's happened before.
00:04:08
Speaker 1: The economic conditions companies are responding to when they make these shifts are pretty stark. Americans are paying about 32 percent more for their groceries than they were before the pandemic, according to government data. Companies are paying over 45 percent more for their ingredients and raw materials.
00:04:26
Speaker 4: Chocolate has been very expensive and ground coffee.
00:04:30
Speaker 1: So are there other products where you're seeing this kind of nipping and tucking?
00:04:34
Speaker 4: There are very few categories where we haven't seen it.
00:04:39
Speaker 1: Edgar Tversky told me there are three ways companies tend to react in moments of high inflation. One is simply raising prices.
00:04:47
Speaker 4: But they know consumers are price conscious and they're going to notice if the price has gone up.
00:04:53
Speaker 1: Option two is shrinkflation.
00:04:55
Speaker 4: Taking out a little bit of the product contents from the package, try to keep the package looking the same. So in essence, the consumer is getting less for their money.
00:05:06
Speaker 1: Or option three.
00:05:07
Speaker 4: They can... Try to cheapen the product in some way. Use less expensive ingredients. And that's skimflation. Consumers are realizing the product is inferior now.
00:05:20
Speaker 2: It's eroding the trust, Reese's trust, and they're never going to get it back.
00:05:26
Speaker 1: This week, a spokesperson for the Hershey Company told us, quote, the core recipes for our Hershey's chocolate bars and Reese's peanut butter cups have not changed. But for a while now, Brad has had a gut feeling about some of the products he's been tasting. He isn't formally affiliated with the company, but as one of the bearers of the Reese's family name, he has felt compelled to do some independent research.
00:05:49
Speaker 2: Have you ever noticed that in the United States, the Reese's peanut butter cups still say milk chocolate?
00:05:54
Speaker 4: Well, in Europe, they don't say that. There is no milk chocolate on the wrapper.
00:05:58
Speaker 1: But what can be called chocolate in the U.S. can't necessarily be called chocolate everywhere else. So Reese's candies sold in the U.K., for example, are advertised as a combination of, quote, milk chocolate flavor and smooth, rich peanut butter. A Hershey spokesperson told us the company is, quote, continually reviewing our recipes to meet evolving tastes and preferences, end quote. And there are other products in the company's roster that lean on formulas with less of those core ingredients consumers have come to love. A Reese's Fast Break candy bar contains 2 percent or less of chocolate and skim milk. And when Brad bought a bag of heart-shaped Reese's around Valentine's Day, he noticed they weren't made of chocolate and peanut butter, but of, quote, chocolate candy and peanut butter creme.
00:06:46
Speaker 4: I literally had two bites and I had to spit it out.
00:06:49
Speaker 1: Brad even stopped wearing his Reese's racing jacket.
00:06:53
Speaker 4: The U.S.
00:06:53
Speaker 1: Food and Drug Administration has rules when it comes to product labeling. To say something is chocolate, at least 15% of it needs to come from an actual cacao bean. If the peanut butter isn't at least 90% peanuts, it might go by that peanut butter creme name.
00:07:10
Speaker 4: The Nabisco cookies, the chunky cookie version now says chocolatey instead of real chocolate. And the little muffins from Entenmann's. That used to have real chocolate chips. Now they do chocolates.
00:07:23
Speaker 1: And ice cream, too. I feel like I've seen this a lot in ice cream where it's called like frozen.
00:07:27
Speaker 4: Frozen dairy dessert.
00:07:30
Speaker 3: Yes.
00:07:30
Speaker 4: Used to say ice cream on the package. Now either says light ice cream or says frozen dairy dessert because the FDA has, you know, standards of identity.
00:07:43
Speaker 1: Bimbo Bakeries USA, whose parent company owns Entenmann's, says Little Bites have, quote, always been made with real chocolate, end quote, and that there was no change to its ingredients. The company added that after feedback from consumers, they decided to return to their original labeling, which is now rolling out to stores. The company that owns Nabisco did not respond to a request for comment.
00:08:07
Speaker 3: Consumers can readily identify that certain things differ.
00:08:11
Speaker 1: That is Gail Vance-Seville. She runs a consulting firm called Sensory Spectrum. Companies approach her when they want to replace an ingredient in one of their products without making customers mad.
00:08:22
Speaker 3: For example, the color. They only cared when they were out of spec, like a big range. Like you couldn't believe how tolerant they were of the darkness outside. to lightness of the color. They were like, yeah, still the same cracker.
00:08:37
Speaker 2: It's good.
00:08:38
Speaker 1: Gail is a trained chemist, so she is a pro at identifying the notes that a product needs to maintain its signature taste. At Century Spectrum's tasting lab in New Jersey, Gail and her team will experiment with flavorings and chemicals, trying to best replicate a natural ingredient without disturbing the eater's experience. Certain replacements are harder to nail than others, like peanuts and chocolate.
00:09:02
Speaker 3: You have to find some matching chemicals that are going to deliver the same type of roasted notes that have this caramelized character or this what we call chocolate essence, which has a nuttiness and a wininess to it.
00:09:23
Speaker 1: Gail told me companies can spend years and millions of dollars trying to nail their new recipes. And even still, sometimes consumers notice. After the break, what happens when they do? As companies have been experimenting with using cheaper ingredients to cut costs on their products, consumers have noticed and taken action. Brad Reese, the grandson of Reese's Peanut Butter Cup inventor H.B.
00:09:59
Speaker 4: Reese.
00:10:00
Speaker 1: Published an open letter on his LinkedIn addressed to a manager at Hershey. And that letter got a lot of attention.
00:10:07
Speaker 2: I've literally got hundreds and hundreds of letters, emails from people saying, thank you, thank you. I thought I was going nuts. You know, I thought my taste buds were changing. Now you've confirmed it wasn't me.
00:10:20
Speaker 1: And it's not just Brad. For Toronto-based social media marketer Neil Chohan, his crusade started with an ice cream truck.
00:10:29
Speaker 2: About three years ago in the summer, picking up a SpongeBob Popsicle. It's one that I had as a kid. It was my favorite. It had these giant bubblegum eyes on the front. But I noticed mine was missing the gumball eyes.
00:10:46
Speaker 1: Honest mistake, Neil thought. Not so.
00:10:49
Speaker 2: I thought it was like a manufacturing error or something like that, but I started digging into it. And it turns out, over years, they went from the big bubblegum eyes to chocolatey chips.
00:11:01
Speaker 1: Now that Neil was looking, he started noticing similar product changes everywhere. It was like he had opened a skimflation Pandora's box. It made him so upset, he started posting a series on his TikTok account shaming companies. From Oreo filling that he says did not reach the edge of the cookie to Pringles chips, he says, that were getting smaller. A spokesperson for Mars, which owns Pringles, said, quote, We have not reduced the size of Pringles in the U.S. The dimensions of the crisp may vary slightly due to manufacturing factors, but we deliver the stated net weight, end quote. The company that owns Oreo did not reply to a request for comment.
00:11:41
Speaker 2: It's something that I think the average American needs to know about because times are tough and they might be going crazy wondering, why is my money not stretching as far as it used to? This could be the reason.
00:11:54
Speaker 1: Why does SpongeBob not have eyes?
00:11:57
Speaker 2: Exactly. You know what? That might be the headline.
00:11:59
Speaker 1: Nowadays, Neil gets tips from grocery store and drugstore employees who point out discrepancies they notice too. He says his problem is not that the companies are changing their products. It's that as far as he sees it, They're pretending they have it.
00:12:13
Speaker 2: I understand the nuance. There's raw material costs that are going up. Labor is more expensive. I understand why brands aren't making as much profit as they used to if they kept everything the same. I get that. Where my issue lies is the deception behind it.
00:12:31
Speaker 1: An academic study published in July in the Journal of Consumer Research found that consumers are more bothered by skimflation than shrinkflation. But if companies disclose the changes they've made, consumer reactions are significantly reduced. There have been cases of companies bowing to public pressure and backtracking on their skimflation changes.
00:12:52
Speaker 4: Smart balance margarine used to be 64% oil and the rest basically water. They changed the formulation and they lowered the amount of oil content to 39% a few years ago. But consumers noticed. And when you went to the ConAgra website for smart balance, there were literally thousands of consumer complaints. This used to be terrific. It tasted, you know, buttery tasting and rich. And they changed back, which was really amazing.
00:13:31
Speaker 1: Other than public shaming, Edgar says, there is a more formal route to force companies' hands, and that could come from the courts. That's starting to move the needle in some other countries when it comes to shrinkflation.
00:13:42
Speaker 4: There was just a decision in Germany where Mondelez, which is a big consumer products maker, they have a chocolate bar in Europe that went from 100 grams to 90 grams, but the package looked Of course, the net weight was showing, but the court said there's an expectation on consumers' parts that if the product looks the same, it should be the same. The burden shouldn't be on the consumer to have to check the fine print every time you buy it. And they basically said that Mondelez in the future has to put a notice right on the packages for four months when they lower the contents.
00:14:35
Speaker 1: If companies had to advertise these sorts of changes the same way they market other new and improved products, Edgar thinks it could go a long way.
00:14:43
Speaker 4: You always see product manufacturers say when they give you extra, you know, bonus pack, look, 20% more. But we ever see in the United States, look, 20% less. Anti-bonus. Right.
00:15:00
Speaker 1: But even the most vigilant consumer can't catch every change a company might make. While there are rules food companies have to follow when calling something chocolate or ice cream or orange juice, many products don't have those rules. If a company wants to put less seasoning on its potato chips, use lower quality oil in its cake recipe, or water down its detergent, the only hint we might have is our own memory of how something used to be, how satisfying that crunch was, or how good a product was at getting stains out of our shirts. As for the suite of newer Reese's products using ingredients Brad hated, it looks like things will be changing. A spokesperson told us the company will be, quote, bringing a small portion of remaining Hershey's and Reese's products in line with their classic milk and dark chocolate recipes in 2027.
00:15:49
Speaker 2: And so now I'm wearing Reese's again.
00:15:52
Speaker 1: That's right. He's back to rocking his Reese's racing jacket in public. This is The Big Take from Bloomberg News. I'm Stacey Banik-Smith, in for David Gurra and Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to your podcasts, helps people find the show, and thank you for listening. We'll be back tomorrow.
Speaker 1: Stacey Vanek-Smith here from Everybody's Business. Today we are sharing an episode from The Big Take, which is one of our very favorite Bloomberg podcasts. This episode is about skimflation, which is when a product or service drops in quality, but the price remains the same. Max and I will be back with a new episode of Everybody's Business on Friday.
00:00:23
Speaker 2: Bloomberg Audio Studios. Podcasts.
00:00:27
Speaker 3: Radio. News.
00:00:29
Speaker 1: So I read you've been eating peanut butter cups quite frequently since you were a kid.
00:00:34
Speaker 2: Oh, yeah, I love them. I mean, it's absolutely, people say it's the crack cocaine of candy.
00:00:40
Speaker 1: This is Brad Reese. And if you haven't already guessed, he is a big fan of Reese's peanut butter cups. But he's not just a fan.
00:00:49
Speaker 4: My dad was Charles Richard Reese, who was the youngest of the 16 children of H.B.
00:00:56
Speaker 2: Reese, the inventor of Reese's.
00:00:59
Speaker 1: And Brad leans into that candy lineage hard. Sometimes he wears a bright orange Reese's branded racing jacket in public. And people notice.
00:01:09
Speaker 4: It's like being a celebrity, but without the hassle of being a celebrity.
00:01:13
Speaker 2: And what I mean by that is I can turn the light switch on or turn the light switch off.
00:01:18
Speaker 4: How do I turn it on?
00:01:20
Speaker 2: I put something on that says Reese's.
00:01:22
Speaker 1: Brad understands what makes a Reese's peanut butter cup special, too. That smooth chocolate taste, those little ridges that give way to the creamy peanut butter center. But lately, Brad's relationship with the brand has gotten more complicated. Reese's was bought by Hershey back in 1963. And in the years since, Brad says he's found himself time and time again unwrapping a peanut butter cup, taking a bite.
00:01:47
Speaker 2: And I'd say something's not right.
00:01:48
Speaker 1: But was Brad's hunch just a hunch? From chocolate bars to margarine, a lot of beloved brands have been quietly swapping out ingredients for less expensive substitutes as they grapple with surging costs. It's a practice NPR reporter Greg Rosalski calls skimflation.
00:02:06
Speaker 2: An anonymous survey of 300 large food and beverage brands showed that nearly two-thirds of them reformulated at least six recipes.
00:02:14
Speaker 3: Probably a lot of products that used to have 100% olive oil or mostly olive oil probably now have more of a blend.
00:02:19
Speaker 4: I think manufacturers forever have fiddled with the formulas and formulations of their products. Has it always been for the good? You know, maybe as costs go up, it hasn't been.
00:02:32
Speaker 1: That's Edgar Dwarski, a consumer advocate who runs the watchdog website ConsumerWorld.org. And he's been digging into the question, what happens when companies tinker with the recipes of their beloved consumer products to cut costs?
00:02:46
Speaker 4: Consumers aren't in the habit of memorizing the ingredients list. You're making an assumption that it's still the same as what it was. But you can't assume that anymore.
00:03:01
Speaker 1: I'm Stacey Mannix-Smith, in for David Gurra and Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, could skinflation be the biggest consumer grift out there? And What happens when consumers notice the difference in their favorite products? When inflation is high, it puts pressure on both consumers and companies to find ways to cut costs. That has led to a couple of trends. One is called shrinkflation. That is when companies sell less of their product but charge a similar price. President Biden actually called out this practice in a video back in 2024. It's a ripoff.
00:03:41
Speaker 3: Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won't notice. Give me a break.
00:03:49
Speaker 1: President Trump made his own demonstration of the trend by holding up two different sizes of Tic Tac containers at a campaign rally that same year.
00:03:57
Speaker 2: This is inflation.
00:04:00
Speaker 4: This is Tic Tac.
00:04:01
Speaker 3: This is Tic Tac.
00:04:02
Speaker 2: This is inflation.
00:04:03
Speaker 4: This is what's happened before.
00:04:08
Speaker 1: The economic conditions companies are responding to when they make these shifts are pretty stark. Americans are paying about 32 percent more for their groceries than they were before the pandemic, according to government data. Companies are paying over 45 percent more for their ingredients and raw materials.
00:04:26
Speaker 4: Chocolate has been very expensive and ground coffee.
00:04:30
Speaker 1: So are there other products where you're seeing this kind of nipping and tucking?
00:04:34
Speaker 4: There are very few categories where we haven't seen it.
00:04:39
Speaker 1: Edgar Tversky told me there are three ways companies tend to react in moments of high inflation. One is simply raising prices.
00:04:47
Speaker 4: But they know consumers are price conscious and they're going to notice if the price has gone up.
00:04:53
Speaker 1: Option two is shrinkflation.
00:04:55
Speaker 4: Taking out a little bit of the product contents from the package, try to keep the package looking the same. So in essence, the consumer is getting less for their money.
00:05:06
Speaker 1: Or option three.
00:05:07
Speaker 4: They can... Try to cheapen the product in some way. Use less expensive ingredients. And that's skimflation. Consumers are realizing the product is inferior now.
00:05:20
Speaker 2: It's eroding the trust, Reese's trust, and they're never going to get it back.
00:05:26
Speaker 1: This week, a spokesperson for the Hershey Company told us, quote, the core recipes for our Hershey's chocolate bars and Reese's peanut butter cups have not changed. But for a while now, Brad has had a gut feeling about some of the products he's been tasting. He isn't formally affiliated with the company, but as one of the bearers of the Reese's family name, he has felt compelled to do some independent research.
00:05:49
Speaker 2: Have you ever noticed that in the United States, the Reese's peanut butter cups still say milk chocolate?
00:05:54
Speaker 4: Well, in Europe, they don't say that. There is no milk chocolate on the wrapper.
00:05:58
Speaker 1: But what can be called chocolate in the U.S. can't necessarily be called chocolate everywhere else. So Reese's candies sold in the U.K., for example, are advertised as a combination of, quote, milk chocolate flavor and smooth, rich peanut butter. A Hershey spokesperson told us the company is, quote, continually reviewing our recipes to meet evolving tastes and preferences, end quote. And there are other products in the company's roster that lean on formulas with less of those core ingredients consumers have come to love. A Reese's Fast Break candy bar contains 2 percent or less of chocolate and skim milk. And when Brad bought a bag of heart-shaped Reese's around Valentine's Day, he noticed they weren't made of chocolate and peanut butter, but of, quote, chocolate candy and peanut butter creme.
00:06:46
Speaker 4: I literally had two bites and I had to spit it out.
00:06:49
Speaker 1: Brad even stopped wearing his Reese's racing jacket.
00:06:53
Speaker 4: The U.S.
00:06:53
Speaker 1: Food and Drug Administration has rules when it comes to product labeling. To say something is chocolate, at least 15% of it needs to come from an actual cacao bean. If the peanut butter isn't at least 90% peanuts, it might go by that peanut butter creme name.
00:07:10
Speaker 4: The Nabisco cookies, the chunky cookie version now says chocolatey instead of real chocolate. And the little muffins from Entenmann's. That used to have real chocolate chips. Now they do chocolates.
00:07:23
Speaker 1: And ice cream, too. I feel like I've seen this a lot in ice cream where it's called like frozen.
00:07:27
Speaker 4: Frozen dairy dessert.
00:07:30
Speaker 3: Yes.
00:07:30
Speaker 4: Used to say ice cream on the package. Now either says light ice cream or says frozen dairy dessert because the FDA has, you know, standards of identity.
00:07:43
Speaker 1: Bimbo Bakeries USA, whose parent company owns Entenmann's, says Little Bites have, quote, always been made with real chocolate, end quote, and that there was no change to its ingredients. The company added that after feedback from consumers, they decided to return to their original labeling, which is now rolling out to stores. The company that owns Nabisco did not respond to a request for comment.
00:08:07
Speaker 3: Consumers can readily identify that certain things differ.
00:08:11
Speaker 1: That is Gail Vance-Seville. She runs a consulting firm called Sensory Spectrum. Companies approach her when they want to replace an ingredient in one of their products without making customers mad.
00:08:22
Speaker 3: For example, the color. They only cared when they were out of spec, like a big range. Like you couldn't believe how tolerant they were of the darkness outside. to lightness of the color. They were like, yeah, still the same cracker.
00:08:37
Speaker 2: It's good.
00:08:38
Speaker 1: Gail is a trained chemist, so she is a pro at identifying the notes that a product needs to maintain its signature taste. At Century Spectrum's tasting lab in New Jersey, Gail and her team will experiment with flavorings and chemicals, trying to best replicate a natural ingredient without disturbing the eater's experience. Certain replacements are harder to nail than others, like peanuts and chocolate.
00:09:02
Speaker 3: You have to find some matching chemicals that are going to deliver the same type of roasted notes that have this caramelized character or this what we call chocolate essence, which has a nuttiness and a wininess to it.
00:09:23
Speaker 1: Gail told me companies can spend years and millions of dollars trying to nail their new recipes. And even still, sometimes consumers notice. After the break, what happens when they do? As companies have been experimenting with using cheaper ingredients to cut costs on their products, consumers have noticed and taken action. Brad Reese, the grandson of Reese's Peanut Butter Cup inventor H.B.
00:09:59
Speaker 4: Reese.
00:10:00
Speaker 1: Published an open letter on his LinkedIn addressed to a manager at Hershey. And that letter got a lot of attention.
00:10:07
Speaker 2: I've literally got hundreds and hundreds of letters, emails from people saying, thank you, thank you. I thought I was going nuts. You know, I thought my taste buds were changing. Now you've confirmed it wasn't me.
00:10:20
Speaker 1: And it's not just Brad. For Toronto-based social media marketer Neil Chohan, his crusade started with an ice cream truck.
00:10:29
Speaker 2: About three years ago in the summer, picking up a SpongeBob Popsicle. It's one that I had as a kid. It was my favorite. It had these giant bubblegum eyes on the front. But I noticed mine was missing the gumball eyes.
00:10:46
Speaker 1: Honest mistake, Neil thought. Not so.
00:10:49
Speaker 2: I thought it was like a manufacturing error or something like that, but I started digging into it. And it turns out, over years, they went from the big bubblegum eyes to chocolatey chips.
00:11:01
Speaker 1: Now that Neil was looking, he started noticing similar product changes everywhere. It was like he had opened a skimflation Pandora's box. It made him so upset, he started posting a series on his TikTok account shaming companies. From Oreo filling that he says did not reach the edge of the cookie to Pringles chips, he says, that were getting smaller. A spokesperson for Mars, which owns Pringles, said, quote, We have not reduced the size of Pringles in the U.S. The dimensions of the crisp may vary slightly due to manufacturing factors, but we deliver the stated net weight, end quote. The company that owns Oreo did not reply to a request for comment.
00:11:41
Speaker 2: It's something that I think the average American needs to know about because times are tough and they might be going crazy wondering, why is my money not stretching as far as it used to? This could be the reason.
00:11:54
Speaker 1: Why does SpongeBob not have eyes?
00:11:57
Speaker 2: Exactly. You know what? That might be the headline.
00:11:59
Speaker 1: Nowadays, Neil gets tips from grocery store and drugstore employees who point out discrepancies they notice too. He says his problem is not that the companies are changing their products. It's that as far as he sees it, They're pretending they have it.
00:12:13
Speaker 2: I understand the nuance. There's raw material costs that are going up. Labor is more expensive. I understand why brands aren't making as much profit as they used to if they kept everything the same. I get that. Where my issue lies is the deception behind it.
00:12:31
Speaker 1: An academic study published in July in the Journal of Consumer Research found that consumers are more bothered by skimflation than shrinkflation. But if companies disclose the changes they've made, consumer reactions are significantly reduced. There have been cases of companies bowing to public pressure and backtracking on their skimflation changes.
00:12:52
Speaker 4: Smart balance margarine used to be 64% oil and the rest basically water. They changed the formulation and they lowered the amount of oil content to 39% a few years ago. But consumers noticed. And when you went to the ConAgra website for smart balance, there were literally thousands of consumer complaints. This used to be terrific. It tasted, you know, buttery tasting and rich. And they changed back, which was really amazing.
00:13:31
Speaker 1: Other than public shaming, Edgar says, there is a more formal route to force companies' hands, and that could come from the courts. That's starting to move the needle in some other countries when it comes to shrinkflation.
00:13:42
Speaker 4: There was just a decision in Germany where Mondelez, which is a big consumer products maker, they have a chocolate bar in Europe that went from 100 grams to 90 grams, but the package looked Of course, the net weight was showing, but the court said there's an expectation on consumers' parts that if the product looks the same, it should be the same. The burden shouldn't be on the consumer to have to check the fine print every time you buy it. And they basically said that Mondelez in the future has to put a notice right on the packages for four months when they lower the contents.
00:14:35
Speaker 1: If companies had to advertise these sorts of changes the same way they market other new and improved products, Edgar thinks it could go a long way.
00:14:43
Speaker 4: You always see product manufacturers say when they give you extra, you know, bonus pack, look, 20% more. But we ever see in the United States, look, 20% less. Anti-bonus. Right.
00:15:00
Speaker 1: But even the most vigilant consumer can't catch every change a company might make. While there are rules food companies have to follow when calling something chocolate or ice cream or orange juice, many products don't have those rules. If a company wants to put less seasoning on its potato chips, use lower quality oil in its cake recipe, or water down its detergent, the only hint we might have is our own memory of how something used to be, how satisfying that crunch was, or how good a product was at getting stains out of our shirts. As for the suite of newer Reese's products using ingredients Brad hated, it looks like things will be changing. A spokesperson told us the company will be, quote, bringing a small portion of remaining Hershey's and Reese's products in line with their classic milk and dark chocolate recipes in 2027.
00:15:49
Speaker 2: And so now I'm wearing Reese's again.
00:15:52
Speaker 1: That's right. He's back to rocking his Reese's racing jacket in public. This is The Big Take from Bloomberg News. I'm Stacey Banik-Smith, in for David Gurra and Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to your podcasts, helps people find the show, and thank you for listening. We'll be back tomorrow.
