By Jennifer Williams

Consumer goods companies are enlarging their range of products -- by making them smaller.

Diminutive snack and drink sizes are hitting store shelves as brands try to keep stretched consumers buying with lower-price options. PepsiCo now sells Lay's potato chips in half a dozen different-sized bags, costing from around 50 cents to roughly $5. Campbell's now markets teensy packages of Pepperidge Farm cookies and Goldfish crackers. And Mondelez International has six different Milka chocolate bar sizes with prices from under $1 to $6.

Food, beverage and consumer-product companies are hoping that a wider range of shrunken size options can boost overall sales volumes, which have been pressured in recent quarters. Smaller-size offerings also tend to have higher profit margins.

"Consumers are going into small pack sizes to optimize their absolute budget," said Mondelez Finance Chief Luca Zaramella. "The $3, $4 as opposed to the $6, $7, particularly in snacks, are becoming a clear center of gravity."

Consumer-goods companies have long tailored packaging for cookies, chips and other items to a range of factors: on-the-go or lunch snacking, portion control, affordability. The last one, however, critical in emerging markets for years, has recently become more important in the U.S., according to Rob Holston, head of the global and Americas consumer products sector group at EY.

Though inflation has moderated in recent years, prices on certain foods have remained excruciatingly high. In response, Americans are trying anything from treasure-hunt shopping to buying fewer items, shopping less often and switching to private labels to cut their shopping bills. By offering different sizes of a snack with a range of prices to match, companies aim to bring in new customers and keep existing ones.

"It's really around looking at purchasing power to make sure [consumers] can get into the franchise. And once they get in there, as they get ... more money in their pocket, they can actually move into larger pack sizes," Holston said. "So you haven't lost them just because the original product was unattainable because of pricing."

For Mondelez, sales have been pressured as consumers cut back on snacking, executives said in April. Overall revenue in the first quarter barely rose, edging up 0.2% to $9.31 billion, as strong sales in Europe and the Asia, Middle East and Africa segment offset declines of 8.8% in Latin America and 4.1% in North America.

The maker of Milka, Cadbury and Toblerone chocolate, Mondelez has raised some price tags to offset cocoa prices that have roughly tripled over the past two years. Meanwhile, as stretched consumers prioritize essentials in store aisles, some are cutting back on snacks. But price variety is helping Mondelez hold on to those people.

The company recently rolled out smaller sleeves of Ritz crackers and Oreo cookies, for instance, which retail for around $3. The snack giant's cookies and crackers category grew roughly 0.3% compared with a year earlier, largely because of the more affordable pack options, executives said in late April.

"If you are on a tight budget, and you favor certain things versus others, particularly when those things cost a little bit more, obviously you tend to prioritize," Zaramella said. "We need to be able to hold on to our consumers that have a limited amount of out-of-pocket spend." The CFO declined to disclose how much the company invests in packaging.

Campbell's executives see a 2.5-ounce grab pack of Goldfish, which retails for less than $2, as a sweet spot for consumers. Liquor giant Diageo is selling smaller bottles of Don Julio tequila that executives say appeal to consumers looking to spend less on alcohol. And Lay's potato chip maker PepsiCo, which has for years offered numerous price points in emerging markets, started rolling out even more price tag varieties in the U.S. this spring.

Even Costco Wholesale, known for its bulk offerings, is slimming down packages in certain categories to meet consumer preference. For instance, fresh muffins that used to come in two-packs of six muffins each for $9.99 are now sold as a pack of eight for $6.99. Muffin sales have grown as a result, said Costco CFO Gary Millerchip.

"In general, I would say we're always looking for bigger items," he said. "But there are examples, like the muffins, where we go a little smaller because that's the right size for the member to give the best value."

Still, there are downsides to adding more package sizes.

In some cases, consumers clearly see they are getting less -- fewer potato chips, cookies, pretzels, for instance -- but not a correspondingly lower price, a tactic known as shrinkflation that has chafed shoppers in recent years.

It can also be expensive to add packaging sizes. But those costs can be minimal, or even reduced, if done right, said Ken Bowles, group finance chief at Smurfit Westrock, which makes dishwasher pods, soup containers, cereal boxes and other forms of packaging for some of the largest consumer-goods companies. With tweaks such as changing the packaging materials or re-engineering boxes so more fit on delivery trucks, companies can add sizes and cut spending, he said.

Another difficulty is that just as some brands expand their product lineups, retailers are working to reduce the number of products on their shelves -- intensifying the already stiff competition for shelf space. Companies want the single-serve option to attract consumers, but they also want the multipack and several options to drive volumes, said Bonnie Herzog, a senior analyst covering the beverage, tobacco and convenience-store sectors in global investment research at Goldman Sachs.

"But there's only so much space for some of these categories," she said. "And it's harder to come by."

Write to Jennifer Williams at jennifer.williams@wsj.com

(END) Dow Jones Newswires

July 01, 2025 06:00 ET (10:00 GMT)

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