Chobani yogurt is latest victim in shrinking grocery case
Shrink a product and customers will notice, Chobani recently found out when it downsized some of its yogurts early last month.
Following the move, many fans logged onto Facebook and Twitter to complain of yogurts that shrank to 5.3 ounces from 6 ounces – a roughly 12-percent decrease.
"We kind of wanted to be more consistent with ourselves and the category more," said Peter McGuinness, Chobani's chief marketing and brand officer, noting that most competitors' single-serve yogurts are 5.3 ounces, as are several of Chobani's recently launched products. Before the switch, customers often wondered why Chobani's larger yogurts contained more calories and sugar than rival cups.
"The whole yogurt shelf has exploded – I'm even in the business and I'm overwhelmed. It was hard to do an apples-to-oranges comparison," he added in a phone interview.
Although Chobani shrank the contents of these cups, the company decided against decreasing the individual cup's price, McGuinness said.
"We think we're pretty competitively priced as it is. We're not the most expensive in the category," he said.
Still, it's planning more promotions this year and also recently introduced a four-pack of many of its 5.3-ounce cups for $4, below the typical price for the individual cups – a move that encourages bulk consumption.
The downsizing trend
Chobani is by far not the only company shrinking its products without lowering the price. Such downsizes are a common strategy among consumer package goods companies looking to pass along rising input costs without hiking prices by shrinking everything from cake mixes to Kleenex.
Interestingly, when raw material costs rise substantially, only 12 percent of consumers prefer this strategy, according to a 2012 Nielsen survey. The largest proportion, 38 percent, said it they would prefer a larger economy size with a lower unit price.
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When input costs rise, companies have several options, including raising prices. That's risky if competitors don't follow suit, using less pricey ingredients, downsizing the size while keeping the same price or doing nothing, the survey said.
"We do think it's a viable strategy for (companies) to downsize," said Todd Hale, Nielsen's senior vice president of consumer and shopper insights, in a phone interview. "If they don't do anything, they'll see their profits erode. Downsizing has been one of the most popular efforts."
Rob Dickerson, senior global packaged food analyst at Consumer Edge Research, said in a phone interview that downsizing has occurred for "quite some time" among packaged food companies, which want to sell as little product as they can for the highest price possible.
"On average, usually when you're reducing the amount of product per unit, you're doing it because you want to have a lower price point on the shelf that the consumer sees so your product doesn't seem as expensive," he said. "It's a strategy that allows the consumer to still get some of the product at a price point that seems that more affordable without reducing profitability."
Concerns about Chobani fans
This shrinkage is the latest in a series of incidents that have upset some fans of the country's biggest Greek yogurt manufacturer though McGuinness called the concern "isolated."
In mid-December, Whole Foods announced a planned phase-out of Chobani by early 2014 as it reallocates space in its yogurt aisle.
In the wake of this announcement, concerns surrounding the Chobani supply chain bubbled among customers – specifically about the use of GMOs (or genetically modified organisms) in the cows' feed. (Currently, the FDA regulates foods made from genetically engineered plants, but neither supports or opposes them.)
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Although Chobani doesn't add GMOs to its product, it's unable to ensure that the grain fed to the cows producing the milk doesn't contain GMOs.
Chobani released a statement on its site, saying that "there is not enough organic milk available to meet our broad consumer demand" and that the company continues to investigate new feed options.
This follows a voluntary recall in September of some of the yogurt maker's products "due to reports of product bloating and swelling and some claims of illness as the company continues its investigation to identify the root cause," the FDA said.
Although McGuinness said the company did lose some market share in September, it gained it back in October. Last year, the company's sales grew more than 30 percent year over year, he said.
—By CNBC's Katie Little. Follow her on Twitter