The Seismic Changes in Doritos Supply

During March 2022, PepsiCo removed five chips from every bag of Doritos. While the bag’s weight shrunk from 9.75 ounces to 9.25, its price remained at $4.29.

A bag with fewer Doritos is just a small part of today’s story.

Doritos Supply and Demand

U.S.

Starting big, we can look at the entire tortilla chips category. You can see that, at a 45 percent dollar share in the U.S., Doritos is dominant:

The shrinkflation website, mouseprint, tells us that Doritos is doing nothing new. Eight years ago, in 2013, they downsized from 10 1/2 ounces to 10 ounces per bag:

In addition, citing rising cost of ingredients, packaging, and fuel, PepsiCo also increased prices:

Europe

With the two top U.S. sellers from PepsiCo, we can consider what the European supermarket chain, Carrefour, announced last week. Because of “unacceptable price increases,” they said they were removing PepsiCo products from store shelves in France, Belgium, Spain, and Italy. In addition to Doritos, the missing items include Lay’s, Lipton Teas, Quaker Foods, and Benenuts snacks. PepsiCo and Carrefour are negotiating a return.

South Korea

Similar to South Korea’s recent decision, Carrefour had been attaching shrinkflation labels to products for four months. However, South Korea will mandate that the manufacturer state the weight or size change on the package. In South Korea, milk and Ramen Noodles top the list.

Our Bottom Line: Demand Elasticity

When economists cite elasticity, they are really talking about how we react to price changes. Seen through a commonsense lens, elasticity expresses how much a price change affects the quantity we demand. Yes, according to the law of demand, price up will always mean less quantity and price down, more. Next though, elasticity takes a closer look by asking how much. More precisely, we are comparing the percent change in price to the percent change in quantity. As our denominator, the percent price change needs to be bigger than the percent quantity change, the numerator, to give us an elasticity number that is less than one. When the number is less than one, it signals a relatively small response that we call inelasticity. With Doritos, although price was up or the same, and chips down, during 2022, still sales remained constant.

So yes, we have had seismic changes in Doritos supply. With an inelastic consumer though, the impact is small.

My sources and more: Hearing that Carrefour was taking PepsiCo. products off their shelves, I wanted to learn the bigger (smaller) picture.. That took me to Doritos and a slew of websites. They ranged from the shrinkflation site to chips statistics to Newsweek, and WSJ. and The Washington Post. Then, there was still more at the Daily Mail.