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When Food Packages Get Smaller, Profits Get Bigger

oreo thins display

Great things come in small packages -- and in this case, great things mean some of America's favorite junk foods.

According to Euromonitor, recent health trends indicate consumers are trying to limit the amount of sugar and fat they are eating. So, companies like Coca-Cola, Nabisco and McDonald's are starting to offer some of their seminal products in smaller packages.

Before you get all teary-eyed thinking fast food and snack companies care about your health, consider this article from Quartz.

The idea is simple: Make the product smaller, make it cost more and increase the volume and frequency of purchase. In fact, companies are reporting increased sales and increased prices per volume.

Coke COO James Quincey, in a recent Deutsche Bank call with investors, said the company plans to "provide a portfolio of products that encourage and enable consumers to enjoy added sugar responsibly."

And this trend is expected to continue as companies and investors catch on. For example, McDonald's is testing a Mac Jr. Nabisco is testing Oreo Thins. And Starbucks, a miniature Frappuccino.

Offering foods in smaller packages gives companies the appearance of concern for consumer health, while allowing them to charge more per fluid ounce. That's according to Linda Montag, a senior analyst at Moody's.

"Reduction in pack size is not exclusive to single-serve sizes, there is also evidence of family packs shrinking in size… to suit smaller households in Europe seeking to regulate a bit more how much of their favorite carbonated soft drink they consume," according to Euromonitor.

So far, there is no evidence to support that smaller packaging will improve health outcomes for customers, but there is evidence that when people finish a single-sized serving, they stop eating. However, Hershey's has also reported that customers are eating less in a single setting, but eating more often.

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