• Wed. Oct 5th, 2022

Feeling lean: Food industry weakens quality and services as costs rise

ByStephanie M. Akbar

Sep 14, 2022

A saltwater-infused “frozen dairy dessert” billed as an ice cream substitute. Tins of ham with 35% water. Small jars of coffee beans with labels claiming to make the same number of cups as the large jars.

It’s called “skimpflation,” and it’s a practice found in supermarkets across the country.

Industry analysts say the trend is up as manufacturers reduce product quality and reduce the number of employees to offset increases in ingredient and labor costs.

Customer interaction platform UJET released a survey of 1,600 consumers on Tuesday which found 66% had experienced inflation in the past six months – and 87% said they would spend less or stop completely to spend on brands making such reductions.

“Food prices are under tremendous pressure due to rising raw material and labor costs, pandemic-related inflation, existing supply chain challenges and energy and transportation costs,” said Heather Garlich, senior vice president of FMI – The Food Industry Association. . “The current crisis in Ukraine is also straining the global food system, worsening already high food prices.

Ms Garlich cited a shortage of sunflower oil that is forcing manufacturers to seek new suppliers or consider reformulating ingredients. About half of the world’s sunflower oil came from Ukraine before the war with Russia cut off exports, she said.

Earlier this year, consumers complained on Twitter when Folgers Classic Roast’s red plastic tubs were reduced from 50 ounces to 43.5 ounces while still claiming to make “up to 400 cups.” Folgers replied that she was using new “roasting technology” to create lighter coffee beans.

Edgar Dworsky, founder and editor of the Consumer World website, said Folgers resorts to an old trick of “blowing up” its beans to get more coffee out of them.

“Now whether you can still get ‘up to 400 cups’ from the new version is another story,” Dworsky said in an email. “Manufacturers do not announce recipe changes or compositional changes to their products.”

Mr Dworsky said Breyers was “playing games” with ingredients even before the pandemic and started adding so much solution to a “frozen dairy dessert” that the company could no longer call it ice cream.

Some hams or half hams are advertised as 35% water, and some turkeys are a 9.5% liquid solution.

As inflation remains at its highest level in 40 years and real wage growth stagnates, pressure is mounting to further cut food production.

The Bureau of Labor Statistics reported Tuesday that food prices rose 11.4% last month from August 2021, the largest annual increase since 1979. On Wednesday, the bureau reported that final demand prices for producers had increased by 8.7% over the same 12 months.

The Census Bureau reported Tuesday that the median household income fell from $71,186 in 2020 to $70,784 last year. During the same period, the number of Americans living below the poverty line fell from 37.5 million to 37.9 million.

Manufacturers have also reduced the size of packaging for many products while keeping prices unchanged, a concept economists call “shrinkflation”. Consumer World reports that Charmin Ultra Strong toilet paper, Peet’s coffee, Suave shampoo, Cap’n Crunch cereal, Huggies diapers and Seventh Generation detergent recently reduced their packaging.

Since switching ingredients requires a lengthy research and development process for Food and Drug Administration approval, it’s easier for restaurants and food companies to cut staff and departments in addition to diluting costs. food, according to analysts.

Julia Pollak, chief economist at job site ZipRecruiter, said the tight job market was causing “slight inflation” in customer service.

“There, it manifests itself in longer customer waits, fewer hours of service and less access to customer support,” Ms Pollak said.

Sean Higgins, a research associate at the libertarian Competitive Enterprise Institute, said companies have reason to be careful about switching ingredients. He noted the many customer complaints when Coca-Cola switched from using cane sugar to corn syrup as a sweetener in the early 1980s, another period of high inflation.

Mr Higgins pointed out that supermarkets sell Nilla wafers without real vanilla and dried cherries or blueberries which are actually cranberries flavored with the taste of other fruits.

“Most canned ‘pumpkins’ aren’t made from the orange variety carved into jack-o’-lanterns, but actually from a variety of squash,” Mr Higgins said.

Michael Warder, director of financial services firm Warder Consultancy in California, said it was impossible to predict how far skimpflation will go.

“With inflation, the pandemic, recent heat waves, storms and floods, people have to make tough choices,” Warder said. “I believe these reassessments will end up being for the good.”

Source link