Watkins sues spice giant McCormick & Co. over pepper tins

That new tin of pepper in the spice rack might look the same as always. But it may not season as many meals as before, and a Minnesota company is going to court over the issue.

Watkins Inc., a small player in the pepper business, filed a lawsuit Tuesday claiming that the nation's largest spice company has "deceived" consumers by stealthily slashing the amount of black pepper in its tins, without shrinking the container or lowering the price.

McCormick & Co. — the dominant maker of the staple spice — earlier this year cut the amount of product in its tins by 25 percent, Watkins said in the suit filed in U.S. District Court in Minneapolis.

Maryland-based McCormick, a publicly traded food business with $4.2 billion in sales last year, did not respond to requests for comment.

It's not uncommon for packaged-food companies to surreptitiously shrink their products, making more money while avoiding a price increase. But lawsuits like the one filed by Watkins are not typical.

Winona-based Watkins, a 147-year-old company owned since 1978 by prominent Minnesota businessman Irwin Jacobs, is best known for its personal-care products and food extracts, particularly vanilla. The company also has long had a spice business, which it has been trying to expand in recent years.

Watkins claims that McCormick violated federal and state laws regarding deceptive trade practices, misleading both consumers and food retailers.

It maintains that McCormick tins that used to contain 8 ounces of pepper now have 6 ounces; tins that contained 4 ounces now have 3 ounces; 2-ounce tins now hold 1.5 ounces.

McCormick "gave the false impression that nothing had changed," Watkins said in the suit. The new tins "are now 25 percent empty, which constitutes nonfunctional 'slack-fill.' "

McCormick, as the dominant pepper player, has essentially set a standard for packaging in the market, and competing pepper brands often use similarly sized tins, Watkins said in the suit.

"McCormick intentionally maintained the price of its standard tins, notwithstanding the significant reduction in the amount of ground black pepper contained in the traditional tin, which had the effect of further adding to the perception that nothing had changed," Watkins said in the suit.

Food manufacturers have long cut back on product size rather than take the risk of raising prices and angering consumers.

"It is much harder to raise prices than anything else," said George John, a marketing professor at the University of Minnesota's Carlson School of Management.

The Consumerist, a popular watchdog website, has a name for stealth downsizing of products: "The Grocery Shrink Ray."

John said that what stands out about the change in pepper tin weights that McCormick is being accused of is its scope. "This is a large shift, but I am not surprised it happened in the spice rack," he said.

The spice rack is like the candy aisle; uniformity of package size is important.

Watkins points out in its lawsuit that side by side, McCormick's and Watkins medium- and small-sized tins look the same, "leading consumers to the reasonable assumption (and accurate until McCormick began slack-filling their traditionally sized tins) that they contain the same quantity of pepper," the suit says.

McCormick has a 43 percent share of the U.S. black pepper market, according to IRI, a Chicago-based market researcher. Store brand pepper, which McCormick also produces for major food retailers, has a 30 percent share.

The next biggest branded competitor, Tone's, made by an Iowa-based food company, has a 9 percent share.

Watkins is a speck as far as market share.

But it's one of the only tinned, branded ground peppers many consumers will see in grocery stores aside from McCormick.

Pepper is primarily grown in south and Southeast Asia. Its price has been rising at a strong clip since 2010, particularly over the past year, putting pepper processors like McCormick in a pinch.

Watkins claims in its suit that McCormick's pepper tin changes have led to confusion in the market.

In one supermarket, the same-sized McCormick pepper tins next to each other were selling for the same price, even though one contained the old 2-ounce level of pepper, the other 1.5 ounces, Watkins says in the suit.

The Star Tribune surveyed six Twin Cities supermarkets and found that two of them — both part of a national chain — had shelf labels for McCormick pepper that didn't match the labels on the pepper tin in regard to weight.

Staff writer Tony Kennedy contributed to this story.

Mike Hughlett • 612-673-7003