Stealth Cost Cutting: Skippy, Kellogg, McDonald's and Others Offer Less for the Same Price

(MoneyWatch)  Squeezed by high ingredient and energy prices, companies are in a bind. They don't want to see profits drop, but raising prices could be risky. Instead, a lot of companies have indulged in the time-honored recessionary practice of holding product prices steady while shrinking package sizes by tiny amounts -- an ounce here, a half an inch there -- and hoping that customers won't care, or maybe even notice.

Sunday's LA Times article on this trend shows a photo with two jars of Skippy peanut butter, ostensibly the same dimensions, but on the newer jar, Unilever has gouged out 1.7 ounces by adding a rounded indent to the bottom.

Kellogg has shrunk its cereal boxes by an average of 2.4 ounces, Dial's formerly 4.5 ounce bars of soap are now only four ounces, and Quilted Northern Ultra Plush toilet paper lost half an inch of width.

A Unilever spokesman said its new sizes are clearly marked on the packaging -- but that's helpful only if customers keep a running list of product ounces in their memory. Several consumers told the L.A. Times reporter they felt deceived by the practice, though it's not clear they'd be any happier with higher prices as an alternative.

"These brands are strong enough to overcome any backlash," said pricing consultant Frank Luby. And even though commodity and oil prices have fallen, he said, it's unlikely that companies will revert back to their larger packaging sizes.

As I noted in an earlier post, fast food restaurants have adopted similar strategies -- Burger King has been experimenting with a smaller-sized patty for its $1 Whopper Jr. And McDonald's is introducing a new double cheeseburger with two patties but only one slice of cheese.