Published: September 22, 2008
Column
By Patricia J. Harned, Ph.D., President, ERC
Please Don’t Shrink the Ethics
Walk into a grocery store or a restaurant nowadays and you will see the end result of an important decision being made by many of our best known companies. The products you consume are changing. Boxes of cereal aren’t quite as full; the house salad at your favorite restaurant is less filling, and according to the Wall Street Journal this past week, even the Whopper Junior is going on a diet.
There is no question that at least part of the discussion taking place in companies today pertains to rising expenses and the need to maintain revenues. It’s surely being approached as a business issue and a business decision at high levels in our companies. And the end result is evident. Faced with higher product costs, many food companies are shrinking the size of their products, from hamburger patties to ice cream. The portion size is noticeable too; the consumerist.com website calls this downsizing the result of a mysterious “grocery shrink ray.” The prevalence of the “shrink ray” is not surprising, given the cost squeezes that many companies are facing these days.
Mary Ellen Burris, the senior vice president for consumer affairs at the Wegman’s grocery chain, says it’s a pattern that is “sure as death and taxes.” Ice cream “half gallon” cartons that used to contain two quarts now are 1.5 quarts, she notes. Potato chip bags have lost an ounce, mayonnaise jars are 28 ounces, not 30 ounces, and tuna has slimmed to five ounces from six ounces, she says. Cereal makers may have gone the furthest. Burris says one of Wegman’s suppliers has reduced 50 cereal sizes in the past year.
Reducing product size isn’t a solution that is limited to just a few items. The Wall Street Journal reports that even McDonald’s and Burger King are trying to come up with less costly hamburgers. McDonald’s is studying a way to make a cheaper double cheeseburger and Burger King wants to trim two ounces off a Whopper Junior. Cheaper Mexican oregano instead of the more costly Mediterranean oregano is now getting wider use and Hershey is using vegetable oil for some of the cocoa butter in its chocolates, the Journal reports.
Even cookies are getting the pinch. General Mills has replaced costly pecans with walnuts in its Turtle cookies, the paper says. In Europe chocolate bars by Cadbury, Nestle and Kraft are all shrinking, according to Dublin’s Independent newspaper.
Consumers both in the U.S. and other countries are angry. Wegman’s Burris said in a recent column titled “Up or Down?” that customers are appealing to her Rochester, N.Y.-based chain to keep its house brands at the same size and increase the prices.
Dermott Jewell, chief executive officer of the Consumers’ Association of Ireland, sees the changes as “just a price increase, but in a totally different guise.”
Undoubtedly, the decision to reduce product size is not taken lightly, and many senior corporate officials are likely involved when it is made. Yet I wonder…is there an ethics and compliance officer present in the discussion? After all, this is a classic example of a business decision with ethics-related implications. Here’s why:
- It’s a matter of transparency. When companies increase the size of their products, they are not quiet about it. From the packaging to the advertisements, we all know that our favorite product has been “supersized” and that we are getting more for their money. Yet the opposite scenario is not the same; consumers notice that product size is reduced, yet no mention of the change is made on packaging or in corporate statements. To the public, “it’s the secrecy behind the moves that is ethically wrong,” Jewell recently told the Independent. “Consumers are entitled to be told clearly and in advance if a product is to be reduced in quantity. If this is the way that some manufacturers and producers are going to act, then I really would question both their ethos and ethics.”
- Consumer trust is at stake. Perhaps the best example of this is Folgers coffee. On August 8 its corporate parent, Procter & Gamble Co., announced Folger’s had created “an enhanced proprietary roasting process” for its Folger’s brand coffees. “The result of the enhanced process is a lighter bean that is more evenly roasted,” said an employee of Porter Novelli, Folger’s advertising agency. That allows Folger’s to offer customers a lighter coffee package that can produce as much coffee as the older, heavier packages. But that’s not the way some consumer websites have been spinning the new Folger’s packaging. They see it as part of the “shrink ray” conspiracy. “This is the first time I’ve seen a company shrink their product but claim you get more,” said one critical website. But that’s just what’s happened, said Collins. “The enhanced Folger’s roasting process has been in development for more than a decade and wasn’t developed in response to the weak economy or rising commodities prices,” he said. “In fact, raw coffee prices have dipped this year and Folger’s decreased prices on coffee in canisters of between 10.5 ounces and 13 ounces by 6.5 percent, or 20 cents each, in March.” Folgers has a good story to tell, but in the face of so many other instances of secret product reductions, a skeptical public isn’t buying it.
Consumers do understand the need for higher prices, especially in present economic times. What they seem to be asking for is straightforward, accurate information. They want that information up front on the package they’re buying. Customers do not want to feel they have been deceived by a trusted brand name when they return home and put a tuna can alongside another can, only to discover they’ve got fewer ounces of fish. When there is no explanation either on the product or in a news release, the results sometimes can be embarrassing.
The Folger’s case shows that there are sound business reasons for companies to be candid with their customers about changes in their products’ appearances. But more importantly, it’s an example of the ways that business decisions are not devoid of ethics. So it begs the question – as an ethics and compliance officer, are you inserting your voice into the process when these types of decisions are made?