When demand for anything increases while supply remains unchanged, prices rise. That's elementary economics.
Also elementary is this: When the increasing demand is for certain kinds of things, food and drink among them, suppliers have two ways to raise prices. One is simply to charge more for the same quantity. The other is to give the buyer less of the thing for the same price.
The bourbon industry provides an interesting illustration. Because foreigners are developing a taste for this quintessentially American whiskey, demand is up. Because bourbon is usually aged for at least a couple of years, often more, supply can't respond quickly to the increased demand.
Many bourbon companies have, naturally, raised their per-bottle prices. The makers of Makers Mark caused a kerfuffle by choosing the second form of inflation.
They watered down their whiskey, lowering its alcohol by volume 6.7% to 42 from 45, or from 90 to 84 proof. They didn't hide the change; they went public with it, insisting their testing proved the taste remained as good as ever.
Customers weren't happy. Some said, "Why didn't you just raise prices, so we could continue to quaff the old, stronger stuff?" Others lamented, "If you're going to give us less whiskey, we shouldn't have to pay as much."
We'll come back to Makers Mark in a minute. Meanwhile, let's segue from drink to food. Would customers at McDonald's or Burger King or any of the others complain if the chains cut portion sizes without reducing prices?
It's an interesting question, because the American restaurant industry is under increasing social pressure to help combat obesity. Serving smaller portions for the same money would be good for both the country's waistline and the industry's bottom line.
For years portion sizes have been going the other way. According to the government's Center for Disease Control and Prevention (http://tiny.cc/…), the average U.S. restaurant meal is four times larger today than it was in the 1950s. The four-ounce hamburger is a thing of the past, as is the three-ounce portion of fries.
Research suggests that much of our eating is mindless. If you put more food in front of many Americans, they'll eat more; if you put less in front of them, they'll eat less. Their signal to stop eating isn't when they're full; it's when their plate is empty.
Brian Wansink, a food researcher at Cornell, does an experiment called the "endless soup bowl" (http://tiny.cc/…). As the subject of the experiments sips the soup, she is unaware that the bowl is being refilled through a hole at the bottom.
She keeps eating. "How can I be done? The bowl is still full." If the bowl hadn't kept refilling, she'd have eaten less and liked it.
All this suggests that the restaurant industry ought to be able to reduce portions, hang tight on prices and not lose customers. Some of us would notice the reduction but wouldn't complain because we know we should eat less. Others would mindlessly eat what's in front of us and hardly notice that we used to eat more.
The problem is in the publicity. We all want to be treated fairly and if companies publicize what they're doing, which they'll probably have to, many of us will think it unfair that we're paying the same for less. Our sense of fairness now aroused, we might even decide we wanted the bigger portion after all.
Just ask the makers of Makers Mark. As I was writing this, the company was announcing they wouldn't dilute their whiskey after all. "You spoke. We listened," the company said. "And we're sincerely sorry we let you down."
Not a promising example for restaurant chains contemplating cutting portions sizes.
Urban Lehner can be reached at firstname.lastname@example.org