In times of economic complexity, many brands try to reduce costs and tighten profit margins, and to do so they apply techniques such as ‘shrinkflation’, from the Anglo-Saxon term ‘shrink’ and ‘inflation’, which consists of reducing the quantity of products offered for sale for the same price. The practice, however, often leads to a worse consumer experience and consequent criticism that impacts reputation.
PepsiCo and shrinkflation
That’s what has happened to PepsiCo, which in recent years has been the subject of criticism from users, who have perceived that they were paying the same price or more for bags of snacks with less product. This has led to certain decline in snack sales as consumers lean towards products from other brands.
To address these complaints and try to increase sales, the company has assured that it will add a 20% more snacks in Tostitos and Ruffles bags for the same sales price, but in selected locations, as stated cnn. In addition, he noted that he will add two more bags to the varied bags of 18 bags.
The decision occurs in a key moment for the sale of snacks, with events as notable as the celebration of Halloween, and in the middle of the American football season. In a few months, the Super Bowl will also take place, a key day for consumption in the United States.
PepsiCo snack sales decreased 1% in the last quarter
As the aforementioned media points out, PepsiCo brands have suffered the impact of inflation on consumers’ pockets. Thus, they have reduced the consumption of snacks and have opted for white brands such as Walmart or Costco. According to data from Bank of America, during the third quarter of 2024, snack sales decreased 0.5% compared to the same period last year.
Specifically, as PepsiCo has indicated in its latest financial results, its snack sales have fallen 1% in the last quarter.
However, the snack prices have increased faster than those of other items in stores. It is estimated that the price per ounce (28 grams) of salty snacks has increased by 36% compared to 2020, a figure that is above the 21% increase in general prices in supermarkets.
The average price of 16-ounce snack bags (approximately 400 grams) this September was $6.46, while in September 2020, the average price was $5.02.
Other brands, such as Coca-Cola, General Mills or Mondelez, They have also been accused in recent years of practicing “shrinkflation”, and in recent months they have implemented measures to increase the number of products and, in this way, try to win back dissatisfied customers. However, there is a general negative climate around price increases.
Starbucks and its twist to the menu
For its part, starbucks has also experienced declines in sales. As it has shared in its latest financial results, its global sales fell 7% between July and September, with the case of the Chinese market being especially significant, where sales have decreased by 14% during the same period. The company believes that consumers have reduced their spending as a result of the rising cost of living in recent years.
With the intention of improving results, the CEO, Brian Niccol, has assured that he will launch a series of changes. “We’ll simplify our overly complex menu, fix our pricing architecture, and make sure every customer feels like Starbucks is worth it every time they visit.“, he commented during the presentation of results, according to BBC.
Niccol, who took office last August, then presented a plan called “Back to Starbucks”, and with which it aims to recover the essence of the offer that popularized the company. Thus, their intention is to change the strategy to grow the business and focus on its cozy cafes, simple menus and customer focus.
Among other things, the new approach also aims to improve the way of placing orders via mobile phone and payment methods. All this with the intention of improving work in establishments and boost customer experience, especially in light of a period in which consumers have reduced their visits to the brand’s cafes.