Snack Pack Pudding© is extremely sensitive to price. Its target price has been 99 cents per 4 pack. It is sold via discounted promotional pricing for up to half the year. Any increase above 99 cents causes and sales fall. 2011 reported annual retail sales for Snack Pack Pudding and Gel Snacks was $177 million.[i]
Price sensitivity is the degree to which a change in the price of a product changes consumers’ purchasing behavior. It is measured by own-price elasticity of demand, an internal measure of sensitivity of demand based on changes in the items price. It is measured by cross-price elasticity of demand based on changes in the price of substitutes for the item.
How the Price of Gas Affects Snack Pack Pudding©
In the United States, the average price of gasoline increased from $1.101/gallon (12/17/2001) to $4.146/gallon (6/30/08).[i]
When the price of gas was low, the claim “Real Nonfat Milk is Our #1 Ingredient” along with a graphic of a cup of milk.
Non Fat Milk, Water, Sugar, Modified Corn Starch, Vegetable Oil (contains one or more of the following: Palm Oil, Partially Hydrogenated Palm Oil, Sunflower Oil, Partially Hydrogenated Soybean Oil), Cocoa (Processed with Alkali), Less than 2% of: Salt, Calcium Carbonate, Sodium Stearoyl Lactylate, Artificial Flavors, Color Added. CONTAINS: MILK
The increase in the price of gas increases manufacturing and distribution costs. Price sensitivity requires Snack Pack Pudding© to be sold at a target price of 99 cents or less or sales will decrease. Something’s gotta give.
ConAgra Foods creates “milk reduction formulas.” The claims displayed on packaging change to “made with REAL NONFAT MILK” and “AS MUCH CALCIUM AS AN 8 oz GLASS OF MILK.” The graphic of a cup of milk remains on the front of the package. The ingredients list on the back tells a different story.
Water, Nonfat Milk, Sugar, Modified Corn Starch, Vegetable Oil (contains one or more of the following: Palm Oil, Partially Hydrogenated Palm Oil, Sunflower Oil, Partially Hydrogenated Soybean Oil), Cocoa (Processed with Alkali), Less than 2% of: Salt, Calcium Carbonate, Sodium Stearoyl Lactylate, Artificial Flavors, Color Added. CONTAINS: MILK
“Real Nonfat Milk is [NO LONGER] Our #1 Ingredient.” Water is. Yet, ConAgra’s advertising and packaging go to great lengths to obfuscate the change. Through continued association with milk, ConAgra is conveying the message that the product is as “wholesome” and “nutritious,” as an 8 oz. glass of milk. Click on the website, www.snackpack.com, and you will see an 8 oz container of milk turn into a container of Snack Pack Pudding©. In fact, it has only been fortified to include “as much calcium as an 8 oz glass of milk.”
Thinking you will buy the store brand, instead? ConAgra manufactures most private label and store brand shelf stable puddings, as well. A few resisted the change and tried to retain their own formulas. However, ConAgra has converted all, or almost all, of these puddings to milk reduction formulas.
Individuals become consumers through an insatiable hunger for processed foods and their key ingredients: sugars, starches, fats, and salts. Consumers participate in the front-of-package labeling and advertising illusions of low cost, convenience, and nutrition and/or rationalize that it is “part of a healthy diet.” The back of the package hints at a deeper truth.
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Next in the Hungry Ghost Economy series, we will look deeper into the ingredients and their direct and indirect negative effects on humans, animals (yes, humans are not the only consumers of Snack Pack Pudding©!), plants, and minerals.
[i] U.S. Energy Information Administration, Weekly U.S. All Grades All Formulations Retail Gasoline Prices retrieved from http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epm0_pte_nus_dpg&f=w
[i] ConAgra Foods, “Snack Pack” in ConAgra Foods Brand Book, 24, retrieved from http://www.conagrafoodscareers.com/~/media/Sites/ConAgra/Images/pdf/conagra-foods-brand-book.ashx