![]() Trick-or-treaters out collecting free treats on Halloween will probably respond to these inflationary pressures by going for volume (maybe staying out later) and mix (seeking out different treats from different houses). So focusing production assets on more profitable products is another lever companies can pull. Some varieties may be more profitable, and how producers schedule their production runs and purchase, hedge, or forward-buy their raw materials could influence their profitability. ![]() Candy manufacturers plan both the volume they produce, as well the mix of different flavors or varieties. This concept may be a little harder for trick-or-treaters to grasp. It may not seem like a lot of savings, but when you multiply it by hundreds of millions of packages, it can add up.Ĭhange your volume or mix, or do a good job contracting for raw materials We can see this effect in thinner water bottles and thinner foil seals on food packages. That usually means the main opportunity to cut costs is in the packaging - thinner wrappers or containers. That means substituting a less expensive material, as long as it doesn’t affect the performance of the product.įor products like Snickers bars, material substitutions are hard because M&M Mars has a very specific recipe. The ironic thing is that the cost of packaging (the plastic bottle in this case) is a significant part of the overall product cost, so as they shrink package sizes, they are getting less efficient.Ĭost reduction is a popular lever for most manufacturing managers to pull, and materials substitution is one way to do it. One way to maintain your retail price point is to provide less product at the same price. container of orange juice first to 59 oz. I rue the day Tropicana shrank their 64 oz. This is inflation at work, and it is also a standard consumer products company response. ![]() I put in a request to M&M Mars to discuss this trend, but they had not responded by the time I posted this. Perhaps the candy companies can count on children not remembering the size from last year, or that it is usually adults who pay for the candy, so who cares. Granted these candies are sold in larger bags that typically contain 40 or more pieces, but the trick-or-treaters will likely notice that candy bars have gotten smaller. The packages are so small that in some cases there is insufficient space to print a full sized logo.
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