Two Congressional members are criticizing Coca-Cola, PepsiCo, and General Mills for shrinkflation—where product sizes are decreased while prices remain unchanged—and for charging higher prices without proper justification.

In letters sent on October 6 to the CEOs of these companies, Sen. Elizabeth Warren, D-Mass., and Rep. Madeleine Dean, D-Pa., expressed worry about the incessant “profit-making at the expense of consumers, through shrinking product sizes and avoiding taxes on those inflated profits.”

They provided specific instances, such as PepsiCo replacing its 32-ounce Gatorade bottles with 28-ounce ones while keeping the price the same, effectively resulting in a “14% price increase.” They also noted that General Mills had reduced the size of some Family Size cereals from 19.3 ounces to 18.1 ounces without changing the price, and had increased prices five times between mid-2021 and mid-2022. Coca-Cola, they pointed out, has utilized “packaging innovation” to offer “less soda for the same price.”

Congresswomen Claim Companies Cut Sizes While Skirting Taxes

Warren and Dean pointed out that despite billions in profits from 2018 to 2022, these companies reported an average effective tax rate of 15% or lower—less than the 21% corporate tax rate established by the tax cuts during President Trump’s administration.

The congresswomen noted that while these firms “continue to profit off consumers,” they are also contributing less in taxes than the families who experience the price hikes.

The companies have not responded to inquiries from YSL News.

What Is Shrinkflation? Why Is It Trending?

Shrinkflation, a tactic involving reducing the amount of product in packaging while maintaining the same price, is not a new phenomenon. Recent data from the Labor Department indicates that shrinkflation has become more prevalent now than during the COVID-19 pandemic, although it was already common before that.

The topic has gained traction as consumers have become more price-conscious over the last year, prompting companies to prefer reducing product sizes rather than increasing prices.

This issue has also emerged as a political topic, with Vice President Kamala Harris advocating for a federal ban on price-gouging. This follows President Joe Biden’s remarks about shrinkflation in a Super Bowl advertisement and during his March 2024 State of the Union address, where he backed the Shrinkflation Prevention Act of 2024 introduced by Senator Bob Casey, D-Pa.

The congresswomen requested pricing details (by ounces) for products over the last seven years from each company, along with estimates of what the federal tax would have been if the 2017 tax cuts had not been enacted. They also inquired if executives received bonuses or incentives during times of high inflation.

They stated that the combination of shrinkflation practices and low effective tax rates can “have the effect of burdening consumers twofold.”

In their letters, Warren and Dean referenced the report “Corporate Tax Avoidance in the First Five Years of the Trump Tax Law” from the Institute of Taxation and Economic Policy, which revealed that 342 large companies paid an average effective tax rate of only 14.1% over five years.