Two congressional Democrats accuse food giants of profiting off ‘shrinkflation’
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Two congressional Democrats are accusing three of the largest food companies of engaging in “shrinkflation” in which product sizes are reduced while prices remain the same or are raised.
In letters to the chief executives of Coca Cola (NYSE:KO), PepsiCo (NASDAQ:PEP), and General Mills (NYSE:GIS) dated Sunday, Sen. Elizabeth Warren of Massachusetts and Rep. Madeleine Dean of Pennsylvania accused the companies of taking part in a “pattern of profiteering” through shrinkflation and “dodging taxes on those price-gouging profits.”
According to the letter, “Coca-Cola has been engaging in shrinkflation for years, promoting what it calls ‘package innovation’ in order to boost the bottom line.”
In the case of PepsiCo, Warren and Dean said, the 32 oz. Gatorade bottle was replaced with a 28 oz. bottle “with the same price – a 14% price increase.”
Meanwhile, General Mills cut the “Family Size” of multiple cereals from 19.3 ounces to 18.1 ounces but charged the same price before raising prices five times between mid-2021 and mid-2022, the lawmakers said.
Warren and Dean said they are seeing information about the average price the companies have charged per ounce of soda and cereal since 2018, what their federal taxes would have been if 2017’s Tax Cuts and Jobs Act had not been in effect, and whether bonuses and incentives were paid to executives during stretches of high inflation.
Coca-Cola, PepsiCo, and General Mills did not immediately respond to requests for comment by Seeking Alpha.