- Elaine Wong

Procter & Gamble confirmed today that it has shrunk the size of its Folgers Classic Roast and Coffeehouse Series as part of an "enhanced, proprietary roasting process."

The former 13-oz. can has been reduced to 11.3 ozs. Folgers also has introduced a new 33.9-oz. can, down from 39 ozs. Prices for the new lineup remain the same, said P&G rep Jen Becker.

Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill., views the move as P&G's cost-saving strategy, as the company (and other CPGs) struggle with rising fuel and commodity costs. The price of green coffee beans, in particular, rose 22% since January of this year, per Intercontinental Exchange.

"The primary motivation for a lot of these companies is, 'How do you address downsizing and do it in a way so that the consumer doesn't get a sudden jolt from seeing the really dramatic price change?" Wisner said.

In its earnings call earlier this week, P&G cited lower overhead costs as a key factor in the company's fourth quarter success. The company reported earnings per share of 92 cents, up two cents from analyst estimates. During the conference, CFO Clayton Daley told analysts P&G will have to further tighten its belt to offset an additional $3 billion increase in commodity costs for the 2009 fiscal year.

P&G, however, assured that it's not a case of "package shrink"—meaning it reduced the size of the product but kept price the same. "We're not reducing the amount of coffee. We've enhanced the roasting process," said Becker. "Think of it like popcorn. There's air [in the can.] It's puffier . . . We preroasted it with just the right amount of heat." Becker added that "improving the technology of roasting" has been in the works for 10 years, and that the 11.3-oz. still yields 90 cups coffee, while the 33.9-oz. yields 270 cups, as before the packaging was reduced.

To avoid consumer confusion at the point of purchase, P&G next month will kick off its "Roasted with Care" campaign, via Saatchi & Saatchi, New York, consisting of TV, in-store merchandising, coupons and interactive. The Folgers brand will soon be in the hands of J.M. Smucker, which in June agreed to acquire the coffee business from P&G for approximately $3.3 billion. The transaction is expected to close later this year.

Patrick Houston, a vp in Booz & Co.'s operations practice in Florham Park, N.J., said P&G is right to address the packaging issue upfront with consumers.  "It's very cohesive and integrated with the overall strategy they have in terms of innovation, but also in terms of the way they're taking out costs and they're doing so in an environmentally sound way that will connect with the consumer," he said.

But initiatives like this risk flopping since consumers typically have negative associations with reduced packaging, Wisner said. "In the end, the consumer has to see the product as equivalent or better than what they were using before," Houston added.