I don’t know about you, but I’m getting a little tired of being overcharged and victimized by the “Slack Pack” phenomenon currently the rage in consumer packaged goods. Slack packing is the practice of bloating the size of the packaging to masquerade the fact that the amount of product inside is actually shrinking.
Recently, Proctor and Gamble was cited and ordered to pay $850,000 in civil penalties as a result of their packaging a 1.7 ounce jar of the company’s Olay high-end face cream in a box twice the size of lower-end face cream that contained a 2 ounce jar. Another recent example is McCormick, the nation’s largest spice company, deceiving consumers by stealthily slashing the amount of black pepper in its tins, without shrinking the container or lowering the price. Examples of this practice go on and on.
But here is another dirty little secret that the slack packers don’t tell you. By reducing the amount of actual product in a multi-use package like potato chips, pepper, or ice cream, the fact is that you, the consumer, will now consume the contents quicker because there is less of it, thereby boosting the need to purchase more frequently.
Moreover, the raw ingredients in a package usually represent just a fraction of the retail price you pay. For example, the cereal folks (you know who you are) start out with 12 cents worth of corn, and after processing, end up with a box of crunchy corn flakes at a cost of around $1.25 per unit. Then by the time you add $.25 for packaging, $1.00 for distribution and marketing, and $.40 for profit you’re now looking at a total of $2.90 delivered to your friendly neighborhood supermarket. The grocer then adds $1.00 for his profit and another $.10 in state and local taxes and alas I give you a $4.00 box of corn flakes. The cost of product in that box, at most, only accounts for 31% of the total retail price.
So by keeping the package size constant (even with less product), unit profit margins remain virtually the same throughout entire the production and distribution channels, and… (drum roll please) …they end up selling more units!
Aint capitalism grand?