Shrinkflation

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In economics, shrinkflation is the process of items shrinking in size or quantity, or even sometimes reformulating or reducing quality[1] while their prices remain the same or increase.[2][3] The word is a portmanteau of the words shrink and inflation. First usage of the term has been attributed to both Pippa Malmgren and Brian Domitrovic.[4]

Shrinkflation allows companies to increase their operating margin and profitability by reducing costs whilst maintaining sales volume.[5] Consumer protection groups are critical of the practice.

Economic definition[edit]

Shrinkflation is a rise in the general price level of goods per unit of weight or volume, brought about by a reduction in the weight or size of the item sold.[citation needed] The price for one piece of the packaged product remains the same or could even be raised. This sometimes does not affect inflation measures such as the consumer price index or Retail Price Index, i.e. might not increase in the cost of a basket of retail goods and services[citation needed], but many indicators of price levels and thus inflation are linked to units of volume or weight of products, so that shrinkflation also affects the statistically represented inflation figures.

Consumer impact[edit]

Consumer advocates are critical of shrinkflation because it has the effect of reducing product value by "stealth".[6] The reduction in pack size is sufficiently small as not to be immediately obvious to regular consumers.[7] An unchanged price means that consumers are not alerted to the higher unit price. The practice adversely affects consumers' ability to make informed buying choices. Consumers have been found to be deterred more by rises in prices than by reductions in pack sizes. Suppliers and retailers have been called upon to be upfront with customers. According to Ratula Chakraborty, a professor of business management, they should if necessary be legally obliged to notify shoppers when pack sizes have been reduced.[8] Corporate bodies deflect attention from product shrinkage with "less is more" messaging, for example by claiming health benefits of smaller portions or environmental benefits of less packaging.[9]

Examples of shrinkflation[edit]

  • Bunge has reduced the volume of Oleina sunflower oil in Ukraine from 1 liter to 850 grams[10] though in Russia, the volume of the bottle remained unchanged.[11]
  • A website in Japanese explains how hundreds of well-known products have been reduced in size, how much has been reduced and when they were reduced.
  • In 2010 Kraft reduced its 200g Toblerone bar to 170g.[12]
  • Tetley tea bags were sold in boxes of 88 instead of 100.[12]
  • Nestlé reduced its After Eight Mint Chocolate Thins box from 200g to 170g.[12]
  • Cadbury's Crunchie were sold in packs of three instead of four.[12]
  • In January 2009 Häagen-Dazs announced that it would be reducing the size of their ice cream cartons in the US from 16 US fl oz (470 ml) to 14 US fl oz (410 ml).[13][14]
  • In March 2014 Coca-Cola reduced the size of their 2 litre bottle to 1.75 litres
  • Birds Eye potato waffles were reduced from a 12 pack to a 10 pack
  • In July 2015, a tub of Cadbury Roses which weighed 975g in 2011, was reduced to under 730g, while a tub of Cadbury Heroes was reduced 695g, however the price remained the same at around £9.[15]
  • In 2016, Mondelez International again reduced the size of the UK 170g Toblerone bar to 150g, while the 400g bar was reduced to 360g. This was done by enlarging the gap between the chocolate triangles.[16] In 2017, Milka Alpine Milk and Milka Nuts & Raisins got reduced from 300 g to 270 g while Triolade got reduced from 300 g to 280 g, all without changing the bag size.[17]
  • In 2017, McVities reduced the number of Jaffa Cakes in every standard packet from 12 to 10, raising the cost per cake from 9.58p to 9.9p[18]
  • In 2018, Koopmans reduced the weight of their buckwheat flour packages by 20% from 500g to 400g - claiming 'renewed' on the package, without specifying that 'renewed' only meant that less product was provided. It is unknown whether wholesale prices were affected, while it is certain that retail pricing remained exactly the same.
Impact of Shrinkflation on CPIH in the UK, with the number of food price quotes that saw a change in package size per month

See also[edit]

References[edit]

  1. ^ Shrinkflation: When less is not more at the grocery store
  2. ^ "More than 2,500 products subject to shrinkflation, says ONS". bbc.com. BBC News. Archived from the original on 2017-07-24.
  3. ^ "The scourge of Shrinkflation eats away at the man in the street like a cancer!". Perpetual Traveller Overseas. Retrieved 2014-06-08.
  4. ^ "That Shrinking Feeling". Merriam Webster dictionary. Retrieved 21 January 2019.
  5. ^ "ECB Meets To Tackle Deflation While Ignoring Shrinkflation". London: Goldcore. 4 September 2014. Retrieved 7 July 2020.
  6. ^ "Shrinkflation – Real Inflation Much Higher Than Reported". London, UK: Goldcore. 28 June 2017. Retrieved 7 July 2020.
  7. ^ Sewraz, Reena (21 February 2017). "Shrinkflation: the food and drink items that have shrunk but aren't any cheaper". lovemoney.com. London, UK: lovemoney.com. Retrieved 7 July 2020. Ratula Chakraborty, senior lecturer in business management at the University of East Anglia, said: "Shrinkflation is a sneaky practice because consumers are not expecting any size changes so do not inspect package sizes unless there is a really noticeable difference."
  8. ^ Studman, Anna (23 February 2019). "Shrinking products: are we paying more for less?". Which?. London, UK: Which?. Retrieved 7 July 2020.
  9. ^ "ECB Meets To Tackle Deflation While Ignoring Shrinkflation". London: Goldcore. 4 September 2014. Retrieved 7 July 2020.
  10. ^ Products. Official site of Oleina in Ukraine
  11. ^ Products. Official site of Oleina in Russia
  12. ^ a b c d "VAT rises but food shrinks". Daily Mirror. Retrieved 2014-06-09.
  13. ^ York, Emily Bryson (March 9, 2009). "Ben and Jerry's Calls Out Haagen-Dazs on Shrinkage". adage.com. Advertising Age. Retrieved November 22, 2015.
  14. ^ partysugar (March 10, 2009). "Ben and Jerry's vs. Haagen-Dazs: A Pint-Sized Battle". popsugar.com. POPsugar. Retrieved November 22, 2015.
  15. ^ "Cadbury take ELEVEN CHOCS from Heroes and Roses tubs but price stays same". Daily Express. Retrieved 2016-11-27.
  16. ^ "Toblerone triangle change upsets fans". BBC. Retrieved 2016-11-08.
  17. ^ Milka se nenápadně zmenšuje, cena ale zůstává stejná. Obalové triky jen tak nepoznáte - Aktuálně.cz
  18. ^ "Jaffa Cakes packet size reduced in latest 'shrinkflation' move". The Guardian. Retrieved 2017-09-26.

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