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In the Chips: Shoppers getting more for their buck in larger bags

THE ASSOCIATED PRESS

Published: July 22, 2009

Your eyes are not deceiving you in the grocery store. Yes, your bag of Doritos just got bigger. No, the price didn't change.

Last year, food packages shrank as food-makers, dealing with record-high ingredient costs, struggled to maintain their profits. But the weakened economy has caused a slump in demand for such ingredients as corn and oil, pushing those prices back down.

With lower ingredient costs -- and higher consumer demand for more value -- some brands such as Frito-Lay are shifting back to bigger packages, without raising prices.

Think of your food packages as an economic barometer: Times are tough, so costs are low and packages are bigger. When times are good, costs are high and packages, to compensate, get smaller.

Tough times also mean that consumers have less money to spend, so they want those bigger packages. Experts say that this is a promotional tool that helps branded food companies steer shoppers back to their products and away from less expensive, store-brand alternatives. So far, the most evident size boosting is in the chip aisle, where Frito-Lay dominates. The company has enlarged some package sizes for such brands as Doritos, Cheetos, Tostitos and Fritos by 20 percent, reversing cuts made to bag sizes last year.

Certain Doritos flavors have gone from 12 ounces back to 14.5 ounces, while Fritos bags are now 17.5 ounces, up from 14.5 ounces, and Cheetos are 10.25 ounces, up from 8.5 ounces. Tostitos are now 15.625 ounces, from 13 ounces. The pricing was unchanged, ranging from $2.89 to $3.99.

The company, a subsidiary of PepsiCo Inc., wants to return value to consumers, spokesman Chris Kuechenmeister said. He said that Frito-Lay was unsure if these changes, originally taken about six months ago, would be permanent.

Offering more for the same price is one way to increase sales since consumers are so focused on saving money right now, said Christopher Shanahan, a research analyst for Frost & Sullivan. Food companies can play up their value to consumers by offering larger-size packages, which cost less on a per-ounce basis, he said.

Experts say that offering larger sizes -- along with other methods, such as coupons or buy-one-get-one-free promotions -- can persuade shoppers who are trying to save money to stick with name brands.

In recent years, packages had been shrinking and prices had been rising -- all in response to the soaring cost of ingredients. Food companies had higher expenses for key commodities used in production -- such as corn that goes into chips, and fuel used to transport goods from place to place. So they raised prices and shrank products -- everything from cereal to ice cream to canned tuna.

Companies are making products bigger again for two reasons: Because they can, and because consumers want it.

Prices for ingredients have moderated from record highs last year. So it costs these companies less to make food, and they can afford to give consumers more product for the same price.