Cookie Monster Declares War on Shrinkflation
"Me Hate Smaller Cookies"
In this issue of Investing Daily Dose(IDD):
🍪Cookie Monster - The Economist🍪
Racking up over 4.1 million views on X, Cookie Monster created a viral sensation, expressing his displeasure about “shrinkflation” – the grinding reality that companies are slashing their portions, while charging the same (or even more):
Indeed, Cookie Monster.
Indeed.
It wasn’t just his lovable persona that made his venting go viral.
It’s that we’re all as frustrated as he is – knowing that we’ll be paying more (and getting less) … probably indefinitely.
Even if raw material prices and production costs were to come back down, there’s no incentive for companies to also cut prices once consumers get used to paying the higher sticker price.
And if, at the same time the company has made the portions smaller, you’ve got a “recipe” for angst … frustration … anger … and all those other emotions that are a lot less satisfying than a nice big cookie.
Bill’s Investing Takeaway
“Man, have I seen this play out over the years. While researching this, I came across a New York Times story from December 30, 1972 … talking about how a 10-cent Hershey bar would still cost 10 cents … but would shrink by 8.35%.
A 2022 study by Appliance City says those candy bars were 19% bigger than in the 1960s (40g vs 35g), but conceded they were about 13% smaller than in the ‘70s, when they were 46g.
And nobody’s talking right now about “skimpflation” – where the ingredients that made something great are lessened … even if you’re still getting the same amount.
One example, according to Axios: A well-known Italian dressing, which slashed its oil content by 22% (apparently replacing it with water) and boosting salt content by 30% to “keep” the flavor.
The bottom line here is that you need to look at the total picture – so cumulative inflation, shrinkflation and skimpflation. And, even more crucial, you need to position yourself so it matters less.
By “cumulative” inflation … I’m talking about …. since January 2021, when the Biden administration took over (and I say this as a “data point,” not a political one), inflation has surged 18% - outpacing the 15.4% gain in hourly wages. Some individual items – like car insurance (up 44%) or gasoline (up 35%) or groceries (up 21%) have hit us even harder.
It’s jarring. I mean, we haven’t spent this much of our paychecks – about 11% – on food since 1991. And, yet, those portions are getting smaller (shrinkflation) and those foods contain less of what made them great (skimpflation).
This is why you need to:
✅Grow your money … by finding powerful, wealth-building storylines … and the companies that are powering them.
✅Find “real” income … or cash flows that put money in your pocket – even after you factor out all taxes, market interest rates and inflation.
✅Invest for the long haul – to give your strategies time to neutralize economic cycles, inflations and the mistakes that are inevitable.
Do that … and some of this other “noise” becomes obsolete.”
