The Effects of Package Downsizing on Food Consumption
Package downsizing is common among the leading producers of packaged food products in the United States. In this study, we examine the effects of package downsizing on household food-at-home consumption and expenditure. We perform an exploratory data analysis of shelf stable tuna and peanut butter markets using Nielsen homescan data. The data comprise grocery store transactions made by a large panel of households over a period of 7 years, 2004-2010. We find that manufacturers use downsizing to implicitly increase prices. Consequently, the average annual household expenditures of both products are considerably higher than their levels before downsizing. The annual average volume consumption of peanut butter remains stable, whereas the volume consumption of shelf stable tuna is approximately 10 percent below its level before downsizing, in spite of an approximately 5 percent increase in the annual package consumption.
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