Tuesday, November 18, 2008

Shortchanged at the Grocery Store

You may not know it, but at the grocery store, you're now paying more for less as manufacturers shrink the package but not the price.

There's a surprise underneath the jar of Skippy. It just developed a dimple---a curve in the jar that cuts out 10% of the peanut butter. Less product for the same price.

During the past year, a lot of your favorite products have been on some heavy-duty diets. Dial soap is still $2.99, but it's 5-ounces lighter.

There's less ice cream in the cartons, and the Cheerios box is smaller. From the front, the boxes look the same as always. Kellogg's is just making them less deep.

We contacted these companies to find out why. Kellogg's pointed to a dramatic rise in the cost of grains. Dreyer's says, "our ingredient costs have risen by 30-60%." Skippy's parent company Unilever says, "manufacturing and transportation costs have also increased significantly."

It has some wondering why companies don't just raise prices, by 10-20 cents?

"Consumers tend to have these psychological price thresholds in their head. so they say, 'I don't want to pay more than a dollar for a bar of chocolate," says, pricing consultant Drew Conrad.

He says when products break that threshold, sales suffer. so the old 8-ounce Hershey bar slims down, as more companies keep the price the same, and cut the quantity.

So here's the way around it. When you're at the aisle, look at the price tag. Next to the price, most times it reads how much you're paying per ounce. From there, you can determine exactly how much you're really paying compared to how much you're getting.

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