🔎 Beyond shrinkflation

Wednesday, April 13, 2022 by Snacks
Navigating shrinkflation in the snack aisle (Mok Jee Chuang/EyeEm/Getty Images)

Navigating shrinkflation in the snack aisle (Mok Jee Chuang/EyeEm/Getty Images)

Navigating shrinkflation in the snack aisle (Mok Jee Chuang/EyeEm/Getty Images)

Navigating shrinkflation in the snack aisle (Mok Jee Chuang/EyeEm/Getty Images)

Yesterday’s Market Moves
Dow Jones
34,220 (-0.26%)
S&P 500
4,397 (-0.34%)
Nasdaq
13,372 (-0.30%)
Bitcoin
$39,668 (+0.51%)

Hey Snackers,

It must run in the family: a year after the container ship Ever Given got itself wedged in the Suez Canal, its sister ship, Ever Forward, is now stuck in the Chesapeake Bay. Tune in to the sequel in the same place you watched the original: IsTheShipStillStuck.com.

Stocks fell for a third day as investors digested March consumer price data that showed the hottest inflation since 1981. About that…

Flated

1. Consumer prices jump the most in 4 decades, unleashing a flurry of creative ’flation

It’s not easy being cheesy… especially when inflation is Flamin’ Hot. Thanks to rising prices, your next bag of Cheetos may be less satisfying: food giants are shrinking their snacks to mask price hikes, just one way companies are trying to manage costs that keep going up. Last month, consumer prices rose 8.5% from last year for the biggest spike in four decades. Driving the increase: skyrocketing energy and food prices.

  • You’re not wrong: bags of Doritos are coming with five fewer chips. And Pepsi shrank the packaging of Gatorade and Wheat Thins, giving customers the illusion prices aren’t rising when they really are.

#Flation takes many forms… and some are easier to spot than others. Snack companies can cut costs just by changing packaging: shrinking it, rebranding it as “limited edition,” or both (“Birthday Edition” Oreos = smaller and pricier). And the “creativity” isn’t confined to the supermarket:

  • Swap-flation: GM is swapping out premium features like heated seats for more basic, butt-freezing alternatives.
  • Skimp-flation: Hilton and Marriott are ditching once standard services like room cleaning, making them “opt in” instead; Hyatt even nixed its mini shampoo bottles.
  • Robo-flation: Banks and airlines are using chatbots instead of employees, and labor-strapped restaurants are replacing waitstaff with QR codes.
THE TAKEAWAY

Shrinkflation could outlast inflation… Even if fuel costs return to normal this year, you might still be a few Doritos short of a full bag. Inflation’s expected to slow in the coming months as Fed rate hikes kick into gear. But just because prices cool doesn’t mean #flation strategies will disappear: experts say companies are unlikely to bring back larger sizes or free perks and services once they’ve trained consumers to expect something less.

Wiin

2. Nintendo merges 2 hit franchises in an interactive Switch game, banking on the power of nostalgia

Bowser goes bowling... From the Game Boy to the Wii, Nintendo popularized video games as a family-friendly activity. Now the 133-year-old Japanese gaming icon is bringing together two of its most popular products. This month Nintendo will release “Nintendo Switch Sports,” a Switch adaptation of “Wii Sports,” the top-selling Wii game that sold 83M copies.

  • Interactive: Joy-Con controllers (which break off from the Switch tablet) let you kick, sprint, and hit virtual balls with your hands. You can even strap the Joy-Con to your leg for soccer.
  • Immersive: Six mini-games (including bowling, tennis, and sword dueling) play out in vivid graphics on your Switch screen or TV.

Nostalgia crossing... Despite pesky supply shortages, Nintendo boosted its sales and profit outlook for the year. Its greatest strength lies in its iconic franchises, from Mario and Pokémon to the Wii series and Switch console — and leveraging them into new but familiar products. “Switch Sports” could gain hit status by merging two best-sellers:

  • Wii winning: Released in 2006, the Wii introduced motion-controlled gaming to a wide audience with winners like “Mario Kart” and “Wii Sports” (shattering TVs in the process).
  • Switch it up: This year, Switch overtook Wii to become Nintendo's best-selling home console ever with 100M+ units sold since its 2017 launch. Thanks, “Animal Crossing.”
THE TAKEAWAY

Nintendo doesn’t need to go meta… Its Wii (and now Switch) games are kind of like a mini-metaverse where you interact with friends, minus the heavy and disorienting headsets. That’s why Nintendo says it’s not interested in getting into the metaverse right now. Products with low barriers to entry from consumer faves like Nintendo could be a threat to the more immersive meta vision that Meta’s banking on.

What else we’re Snackin’

  • Smoggy: The White House will lift a summertime ban on high-ethanol gas known as E15, saying it could save drivers 10 cents/gallon. E15 is banned in the summer because it contributes to smog in warmer weather.
  • Nuggies: Beyond Meat is rolling out its plant-based nuggets to 8K retailers across the US, including CVS, Whole Foods, and Albertsons. Beyond has been struggling to increase sales as the meatless craze cools off.
  • iProb: A new supply snag for Apple: Three of its critical suppliers have suspended production in and around Shanghai because of Covid lockdowns — including the company that assembles up to 30% of the world's iPhones.
  • Lux: High-end EV maker Lucid debuted its new Air sedan, a 450-mile range, $180K beast dubbed the Grand Touring Performance. It won’t be easy to find: Lucid already cut its delivery forecast because of supply disruptions.
  • RTO: Going into the office one or two days a week is the “sweet spot” of hybrid work, a new Harvard study found. It’s one of the few studies to look at actual work outcomes, not just people’s preferences.

Snack Fact of the Day

There are 170K ways to customize a Starbucks drink order

Wednesday

  • Q1 earnings season begins
  • Earnings expected from JPMorgan Chase, Wells Fargo, BlackRock, Infosys, First Republic, Delta, Bed Bath & Beyond, and Rent the Runway

Authors of this Snacks own: shares of Apple, GM, CVS, and Starbucks

ID: 2124303

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