‘Skimpflation’ Could Be the Sneakiest Consumer Grift

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1:32Bloomberg Audio Studios. Podcasts. Radio. News. So I read you've been eating peanut butter cups quite frequently since you were a kid. Oh, yeah, I love them. I mean, it's absolutely, people say it's the crack cocaine of candy. This is Brad Reese. And if you haven't already guessed, he is a big fan of Reese's peanut butter cups. But he is not just a fan. My dad was Charles Richard Reese, who was the youngest of the 16 children of H.B. Reese, the inventor of Reese's. And Brad leans into that candy lineage hard. Sometimes he wears a bright orange Reese's branded racing jacket in public. And people notice.

2:18It's like being a celebrity, but without the hassle of being a celebrity. And what I mean by that is I can turn the light switch on or turn the light switch off. How do I turn it on? I put something on that says Reese's. Brad understands what makes a Reese's peanut butter cup special, too. That smooth chocolate taste, those little ridges that give way to the creamy peanut butter center. But lately, Brad's relationship with the brand has gotten more complicated. Reese's was bought by Hershey back in 1963. And in the years since, Brad says he's found himself time and time again unwrapping a peanut butter cup, taking a bite.

2:55And I'd say something's not right. But was Brad's hunch just a hunch? From chocolate bars to margarine, a lot of beloved brands have been quietly swapping out ingredients for less expensive substitutes as they grapple with surging costs. It's a practice NPR reporter Greg Rosalski calls skimflation. An anonymous survey of 300 large food and beverage brands showed that nearly two-thirds of them reformulated at least six recipes. Probably a lot of products that used to have 100 % olive oil or mostly olive oil probably now have more of a blend. I think manufacturers forever have fiddled with the formulas and formulations of their products.

3:34Has it always been for the good? You know, maybe as costs go up, it hasn't been. That's Edgar Dwarsky, a consumer advocate who runs the watchdog website ConsumerWorld.org. And he's been digging into the question, what happens when companies tinker with the recipes of their beloved consumer products to cut costs? Consumers aren't in the habit of memorizing the ingredients list. You're making an assumption that it's still the same as what it was. But you can't assume that anymore. I'm Stacey Vanek-Smith, in for David Gurra and Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, could skimflation be the biggest consumer grift out there?

4:20And what happens when consumers notice the difference in their favorite products? When inflation is high, it puts pressure on both consumers and companies to find ways to cut costs. That has led to a couple of trends. One is called shrinkflation. That is when companies sell less of their product but charge a similar price. President Biden actually called out this practice in a video back in 2024. It's a ripoff. Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won't notice. Give me a break. President Trump made his own demonstration of the trend by holding up two different sizes of Tic Tac containers at a campaign rally that same year.

5:06This is inflation. This is Tic Tac. This is Tic Tac. This is inflation. This is what's happened.

5:16The economic conditions companies are responding to when they make these shifts are pretty stark. Americans are paying about 32 percent more for their groceries than they were before the pandemic, according to government data. Companies are paying over 45 percent more for their ingredients and raw materials. Chocolate has been very expensive and ground coffee. So are there other products where you're seeing this kind of nipping and tucking? There are very few categories where we haven't seen it. Edgar Dvorsky told me there are three ways companies tend to react in moments of high inflation. One is simply raising prices.

5:55But they know consumers are price conscious and they're going to notice if the price has gone up. Option two is shrinkflation. Taking out a little bit of the product contents from the package, try to keep the package looking the same. So in essence, the consumer is getting less for their money. Or option three. They can try to cheapen the product in some way, use less expensive ingredients. And that's skimpflation. Consumers are realizing the product is inferior now. It's eroding the trust, research trust, and they're never going to get it back. This week, a spokesperson for the Hershey Company told us, quote, the core recipes for our Hershey's chocolate bars and Reese's peanut butter cups have not changed.

6:43But for a while now, Pratt has had a gut feeling about some of the products he's been tasting. He isn't formally affiliated with the company, but as one of the bearers of the Reese's family name, he has felt compelled to do some independent research. Have you ever noticed that in the United States, the Reese's peanut butter cups still say milk chocolate? Well, in Europe, they don't say that. There is no milk chocolate on the wrapper. But what can be called chocolate in the U.S. can't necessarily be called chocolate everywhere else. So Reese's candies sold in the U.K., for example, are advertised as a combination of, quote, milk chocolate flavor and smooth rich peanut butter.

7:19A Hershey spokesperson told us the company is, quote, continually reviewing our recipes to meet evolving tastes and preferences, end quote. And there are other products in the company's roster that lean on formulas with less of those core ingredients consumers have come to love. A Reese's Fast Break candy bar contains 2 % or less of chocolate and skim milk. And when Brad bought a bag of heart-shaped Reese's around Valentine's Day, he noticed they weren't made of chocolate and peanut butter, but of, quote, chocolate candy and peanut butter creme. I literally had two bites and I had to spit it out.

7:58Rad even stopped wearing his Reese's racing jacket. The U.S. Food and Drug Administration has rules when it comes to product labeling. To say something is chocolate, at least 15 percent of it needs to come from an actual cacao bean. If the peanut butter isn't at least 90 percent peanuts, it might go by that peanut butter creme name. The Nabisco cookies, the chunky cookie version now says chocolatey instead of real chocolate. And the little muffins from Entenmann's that used to have real chocolate chips, now they do chocolatey. And ice cream too. I feel like I've seen this a lot in ice cream where it's called like frozen.

8:36Frozen dairy dessert. Yes. Used to say ice cream on the package. Now either says light ice cream or says frozen dairy dessert because the FDA has standards of identity. Bimbo Bakery's USA, whose parent company owns Entenmann's, says Little Bites have, quote, always been made with real chocolate, end quote, and that there was no change to its ingredients. The company added that after feedback from consumers, they decided to return to their original labeling, which is now rolling out to stores. The company that owns Nabisco did not respond to a request for comment. Consumers can readily identify that certain things differ.

9:20That is Gail Vance-Seville. She runs a consulting firm called Sensory Spectrum. Companies approach her when they want to replace an ingredient in one of their products without making customers mad. For example, the color. They only cared when they were out of spec, like a big range. Like, you couldn't believe how tolerant they were of the darkness to lightness of the color. They were like, yeah, still the same cracker. It's good. Gail is a trained chemist, so she is a pro at identifying the notes that a product needs to maintain its signature taste. At Century Spectrum's tasting lab in New Jersey, Gail and her team will experiment with flavorings and chemicals, trying to best replicate a natural ingredient without disturbing the eater's experience.

10:05Certain replacements are harder to nail than others, like peanuts and chocolate. You have to find some matching chemicals that are going to deliver the same type of roasted notes that have this caramelized character or this what we call chocolate essence, which has a nuttiness and a whininess to it.

10:31Gail told me companies can spend years and millions of dollars trying to nail their new recipes. And even still, sometimes consumers notice. After the break, what happens when they do?

10:51The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference.

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13:19As companies have been experimenting with using cheaper ingredients to cut costs on their products, consumers have noticed and taken action. Brad Reese, the grandson of Reese's peanut butter cup inventor H.B. Reese, published an open letter on his LinkedIn addressed to a manager at Hershey. And that letter got a lot of attention. I've literally got hundreds and hundreds of letters, emails from people saying, thank you, thank you, I thought I was going nuts. You know, I thought my taste buds were changing. Now you've confirmed it wasn't me. And it's not just Brad. For Toronto-based social media marketer Neil Chohan, his crusade started with an ice cream truck.

14:01About three years ago in the summer, picking up a Spongebob Popsicle. It's one that I had as a kid. It was my favorite. It had these giant bubblegum eyes on the front. But I noticed mine was missing the gumball eyes. Honest mistake, Neil thought. Not so. I thought it was like a manufacturing error or something like that, but I started digging into it. And it turns out over years, they went from the big bubblegum eyes to chocolatey chips. Now that Neil was looking, he started noticing similar product changes everywhere. It was like he had opened a skimflation Pandora's box. It made him so upset, he started posting a series on his TikTok account shaming companies.

14:46From Oreo filling that he says did not reach the edge of the cookie, to Pringles chips he says that were getting smaller. A spokesperson for Mars, which owns Pringles, said, quote, We have not reduced the size of Pringles in the U.S. The dimensions of the crisp may vary slightly due to manufacturing factors, but we deliver the stated net weight, end quote. The company that owns Oreo did not reply to a request for comment. It's something that I think the average American needs to know about because times are tough and they might be going crazy wondering, why is my money not stretching as far as it used to?

15:24This could be the reason. Why does SpongeBob not have eyes? Exactly. You know what? That might be the headline. Nowadays, Neil gets tips from grocery store and drugstore employees who point out discrepancies they notice, too. He says his problem is not that the companies are changing their products. It's that as far as he sees it, they're pretending they have it. I understand the nuance. There's raw material costs that are going up. Labor is more expensive. I understand why brands aren't making as much profit as they used to if they kept everything the same. I get that. Where my issue lies is the deception behind it.

16:02An academic study published in July in the Journal of Consumer Research found that consumers are more bothered by skimflation than shrinkflation. But if companies disclose the changes they've made, consumer reactions are significantly reduced. There have been cases of companies bowing to public pressure and backtracking on their skimflation changes. Smart Balance margarine used to be 64 % oil and the rest basically water. They changed the formulation and they lowered the amount of oil content to 39 % a few years ago. But consumers noticed. And when you went to the ConAgra website for Smart Balance, there were literally thousands of consumer complaints.

16:53This used to be terrific. It tasted, you know, buttery tasting and rich. And they changed back, which was really amazing. Other than public shaming, Edgar says, there is a more formal route to force companies' hands. And that could come from the courts. That's starting to move the needle in some other countries when it comes to shrinkflation. There was just a decision in Germany where Mondelez, which is, you know, a big consumer products baker, they have a chocolate bar in Europe that went from 100 grams to 90 grams. But the package looked the same. Of course, the net weight was showing, but the court said there's an expectation on consumers' parts that if the product looks the same, it should be the same.

17:45The burden shouldn't be on the consumer to have to check the fine print every time you buy it. And they basically said that Mandalas in the future has to put a notice right on the packages for four months when they lower the contents. If companies had to advertise these sorts of changes the same way they market other new and improved products, Edgar thinks it could go a long way. You always see product manufacturers say when they give you extra, you know, bonus pack, look, 20 % more. But we ever see in the United States, look, 20 % less. Anti-bonus. Right. But even the most vigilant consumer can't catch every change a company might make.

18:36While there are rules food companies have to follow when calling something chocolate or ice cream or orange juice, many products don't have those rules. If a company wants to put less seasoning on its potato chips, use lower quality oil in its cake recipe or water down its detergent, the only hint we might have is our own memory of how something used to be, how satisfying that crunch was or how good a product was at getting stains out of our shirts. As for the suite of newer Reese's products using ingredients Brad hated, it looks like things will be changing. A spokesperson told us the company will be, quote, bringing a small portion of remaining Hershey's and Reese's products in line with their classic milk and dark chocolate recipes in 2027.

19:20And so now I'm wearing Reese's again. That's right. He's back to rocking his Reese's racing jacket in public.

19:33This is The Big Take from Bloomberg News. I'm Stacey Vanek-Smith in for David Gura and Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to your podcasts, helps people find the show. And thank you for listening. We'll be back tomorrow. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else.

20:13So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Whatever your goal, trade show giveaways, client gifts, or team gear, 4imprint has the promo products to match. With thousands of options, from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget, with standout choices at every price point. And with their 360-degree guarantee, you can be 4imprint certain your order will show up just right, right on time.

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