Consumer Safety & Awareness Part 34

Advertising Scams
(Part 8 – Deception Through Subtraction)

This is the last in our series "Deception by..." Next week we will be taking a brief vacation. Join us on September 28 for some new thoughts about consumer awareness.

Keep the box size the same, or increase it, and reduce the contents. Pay more, get less. We can take ice cream as an example. The companies cite rising sugar and milk costs as the cause of the price increases in 2006. Typically, in New York’s Mid-Hudson region, a 64-ounce container of brand name ice cream was retailing at $1.99 and occasionally going on sale for as low as $1.49. That year there was a reduction in container size to 56 ounces accompanied with a price rise to $2.99. Interpreting that, we go from 3 cents an ounce to 5.3 cents per ounce, a 60% increase almost overnight.

Forward to 2009 and milk and sugar prices are within 5% of their pre-price increase. Transportation costs have been reduced. Wages have gone up an average of under 4%, yet we now find that brand name ice cream is selling for $4.99 and the container holds 48 ounces. Per ounce that’s 10.4 cents, more than 3 times the cost it was three years ago. Expenses have, perhaps, risen 10% during that time.

How do companies justify that?

In a recent news article, dairy farmers are complaining that they are receiving less than 50% of last year’s prices for raw milk. Processed milk has come down considerably recently, possibly by as much as 25%. Yogurt and cottage cheese have also seen a slight price drop. But other dairy products have seen price increases. Cheese is up almost 25%. Bakeries are charging more citing increase milk costs. (Eggs are currently selling at the lowest in several years. Sugar and flour wholesale prices are down as well.)

Yet store brand ice cream, store brand cheese, yogurt, sour cream, and other dairy products have seen drastic price reductions. Bakery products continue to increase in price. If you ask why – you get the standard reply: “Cost of ingredients have increased.”

Bananas? There was a blight in the Cavendish bananas that we typically see in the stores. It’s one of hundreds of types of bananas, the one that we’re used to eating. Prices increased dramatically between 2006 and 2008 as a result of shortages and the cost of research to improve the crop. This has paid off, as the 2009 harvest is bountiful. WalMart has reduced prices from a high of 69-cents to 42-cents. Several box stores are down below that. Yet supermarkets, now that people are used to 69-cents, have generally refused to lower their prices.

Public congratulations must go to cereal companies. Their prices, which rose in 2005-6 due to the amount of corn diverted to ethanol, stabilized once the price of ingredients did. Recently we have seen sale prices reflecting levels not seen in over ten years. Post and Kellogg cereal, same size boxes (and occasionally promotional bonuses) can be seen for under $2.00, less than half the 2007 price.

A few weeks ago we compared advertising to magician tricks – now you see it, now you pay twice the price. Deception through subtraction applies to advertising pictures as well. Have you ever compared a store’s ad picture to the real thing? They show huge English muffins holding overflowing egg-and-cheese sandwiches. In actuality, they usually picture the pre-cooked items. Once prepared and handed to you, they may be half the size.

Last winter a national chicken restaurant was advertising 12 pieces for $9.99 (with all the trimmings), 83-cents per piece. Now they have a great deal for you – 16 pieces for only $19.95. That’s a price increase of 42 cents per piece of chicken, a 50% increase. A slightly larger quantity for a considerably larger price.