What Shrinking Snack Sizes Can Tell Us About the Indonesian Economy

I could name countless of things that were better in the past than they are today. But the most shocking—to me, at least—is how our favorite Indonesian snacks have shrunk a lot since I was a kid. What used to be a pack full of MSG goodness has, over the years, turned into a smaller, air-filled, packet of MSG goodness. And this might be one of the few problems as a Millennial, I'm willing to take responsibility for.

In my last few runs to the supermarket, I had noticed that the packaging of snacks I used to buy every day as a child, foods like Chiki Balls, Momogi and Taro, have gotten way smaller than I remembered. I immediately brought it up to some friends, and we came up with ideas why. Some believe that it's all just in our heads. Maybe it’s not that the snacks have gotten smaller, but our hands have gotten bigger. But others say the producers purposely miniaturized the snacks because of economic reasons—and it turns out they're right.

Since the 1998 economic crisis hit Asia in general, we’ve been familiar with the existence of products with “economical packaging.” It means smaller packaging with a smaller price tag. Before the crisis, $1 USD was equal to Rp 2,000. When the crisis hit, the Rupiah weakened significantly—at the height of the crisis in June 1998, the rate was Rp 16,650 per dollar—causing a huge drop in Indonesians' purchasing power. Today it's rebounded slightly to Rp 13,520 on the dollar.

Because of this, many products classified as Fast Moving Consumer Goods (FMCG) were put out in smaller packages. I mean, this is understandable back then, but the Indonesia’s economy has been a lot better since the crisis. We have a sizable middle class now. So why haven't our favorite snacks recovered as well?

I tracked down a person who has six years of experience working in FMCG. However, in exchange for the information, I had promised to protect his identity because he wasn't authorized to talk to the press. So let’s just call him Mamang. Mamang said that the biggest market for FMCG products are the middle to lower class consumers. When their demands and purchasing power change, the products change with them.

“Every year inflation happens, and the prices of goods increase," Mamang told me. "A product consisted of the snack itself and its packaging, so if the cost of everything goes up, we have to increase our price as well. But a business will not grow this way since Indonesians prefer to buy affordable products. The only solution is to reduce the content or the packaging, without diminishing the value of the product for consumers.”

During this process companies constantly conducted research on their customers. They would release these smaller products into the market, and if the consumers still bought them, then it was seen as a green light for companies to downsize their products for real. To compensate for the smaller size, companies usually offer other benefits to distract their customers, like new flavors and prizes.

“There’s an internal process to decide what ingredients can be substituted for cheaper ones, without omitting any specific ingredients entirely,” Mamang said. “Usually a company would try to compromise on the packaging first before moving on to the ingredients.”

Yuswohady, a marketing expert who has written dozens of books, said that snack shrinkage could also be attributed to the preferences of the younger generations.

Since 2010, Indonesia’s income per capita has surpassed $3,000 USD, which puts it into the bracket of middle income countries. This means the backbone of Indonesia's economy are Millennials, and they have different buying habits than previous generations.

“They [Millennials] cut down on goods consumption for leisure or experience-based products,” Yuswohady told VICE.

Millennials' behavior is one of the factors causing the decline in the FMCG industry since 2015. Products like snacks, instant noodles, packaged drinks, and medicines fall under this umbrella. The research firm AC Nielsen found that the sale of consumption goods between January and September 2017 is growing at a rate of 2.7 percent rate—down from 7.7 percent over the same time last year. Again, both numbers are still below the average FMCG’s sale of 11 percent in the last 10 years.

“In my analysis, the smaller sizes are done out of necessity," Yuswohady said. "It’s the producers’ attempt to maintain their sales by reducing the price of products, instead of reducing their quality. Smaller packages allow you to maintain profit margins, since consumers have also cut down on their consumption. This way, profit will not be compromised.

“On the cool factor, packaged food can no longer offer a cool experience, it’s not something you can show off. It’s boring for Millennials."

I can smell the irony: I'm a Millennial who's upset about my favorite childhood snacks shrinking, a problem that was pretty much caused by my generation. Perhaps it's time for companies to create "experiential" and "leisure-based" snacks. Otherwise who knows, maybe in a few years, packaged snacks could become obsolete.