‘Shrinkflation’ maybewhat consumers want
Shoppers are price obsessed, writes Sylvain Charlebois.
Consumers constantly look for bargains, and the food industry knows it. According to a recent survey by Dalhousie University, almost 60 per cent of all Canadian consumers consider price as one of the top three decision criteria when grocery shopping. Grocers play around with prices to keep all of us on our toes. Pricing in the food processing sector is intricate. Ingredients, energy costs, wages and so forth can weigh heavily on food manufacturers as they try to cultivate relationships with grocers and retain market shares. For decades, to keep price points low, the shrinking package strategy has been part of the food industry. This can be seen in such items as chips, ice cream, cookies, pasta, chocolate bars — you name it. Some of us have noticed and we have seen several media stories on this issue in recent years. But now, packages are shrinking even faster than ever before. The tactic is so widespread that some are even alluding to the phenomenon of shrinkflation.
All over the world, food packages are shrinking. A recent U.K. study suggests that there, almost 3,000 food products can be found in a typical grocery store that have shrunk since 2012.
Many U.S. food manufacturers have also admitted to shrinking packages to maintain prices at a competitive level. Many of these products enter the Canadian market. Rough estimates suggest that anywhere between 15 to 20 per cent of all packaged food products have shrunk in the last five years, if not more. Food companies have found a way to defend margins without upsetting anyone — well, almost. Shrinkflation, or downsizing, is almost the norm these days. Some consumers find this practice to be irritating. Yet food companies are not really misleading the public. Weight and volume information can easily be found on any labelled package.
Habits make us believe we are purchasing the
In some cases, quantities have been reduced by 15 per cent in three years.
same thing as we zoom in on the one constant that motivates our behaviour when shopping: price.
When costs rise in food manufacturing, a company has basically three options: raise the price, make smaller packages or change the ingredients. Given our competitive food industry, raising prices can be challenging. Since early 2018, prices in food stores have dropped because of higher competition. Yet changing ingredients can be deadly. Some food manufacturers have paid the ultimate price for changing the taste of certain products, just to save a few pennies.
Today, with social media, companies are one poor decision away from seeing an entire product line vanish.
Instead of downsizing products and hoping no one would notice, an alternative for manufacturers looking at increased costs would be to sell flavour over quantity. Studies show that consumers who remember how good a product tastes are willing to pay more for less if given no other choice. Showing a more transparent approach to packaging could let consumers appreciate that things do get complicated out there and some adjustments are required. But we all know that won’t happen.
How shrinkflation is captured by the StatsCan consumer price index, however, is unclear. Protocols show certain quantities being mentioned, but it does not explain how data collection is adjusted as quantities change rapidly.
This contributes to food inflation in a subtle way. StatsCan could assist Canadians in monitoring shrinkflation to help consumers be more vigilant and assess how it affects our food budget. Right now, most of us would not know. In some cases, quantities have been reduced by 15 per cent in three years. Food prices may have gone up by more than six per cent in many cases.
In the end, consumers can be outraged and condemn the practice of shrinking food products.
But when you really think about it, food companies are really delivering what consumers are asking for.
Sylvain Charlebois is professor in Food Distribution and Policy in the Faculties of Management and Agriculture at Dalhousie University in Halifax.