Inflation and the cost of living have become increasingly difficult to keep up with for the average consumer but how are corporations coping? Shrinkflation, that’s how!

If you’ve recently visited grocery stores or bought a product that suddenly appeared smaller compared to what it used to be, it’s not just your imagination, it’s shrinkflation. Consumers are being hoodwinked into thinking that their favourite brands haven’t increased their prices when it’s actually the opposite – we’re paying the same, if not more, for less…

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What is Shrinkflation?

If everyday consumers are struggling to manage monthly the costs of living, how are brands and companies coping? Cost-push inflation occurs when companies have to ultimately make the decision to rise costs as a result of increased productions costs. Businesses impacted by high inflation rates may also have to raise their prices or seek other marketing means to compensate for daily operating costs – a resolve with negative impacts for customers.

Statistics South Africa reported an increase in annual consumer price inflation from 6.9% in January 2023 to 7.0% in February 2023. This is the largest increase in the past four months, while the consumer price index (CPI) increased by 0.7% from January to February – the largest monthly increase from July 2022 (1.5%).

You probably don’t need statistics to know that prices are soaring, the average price for a basket of groceries is indication enough. Brands have gotten smarter at persuading consumers to choose their products by using shrinkflation tactics.

Shrinkflation combines the words ‘shrink’ and ‘inflation’. The term describes a marketing strategy where manufacturers doctor the quantity of a product by decreasing the quantity, size or weight while keeping the original pricing. Since manufacturers might not have the option of keeping up with the competitive pricing of other brands to convince customers, they resort to shrinkflation. Although shrinkflation and other marketing decisions seem manipulative, it’s not technically illegal if brands label their products.

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Examples of Shrinkflation

Many commercial brands have used shrinkflation and skimpflation to maintain profit margins. Toblerone is one of the most popular and well-known examples of shrinkflation. The previously Swiss brand (now produced in Slovakia) owned by Mondelēz International, decreased its weighting by increasing the gap between chocolate peaks, meaning less chocolate for consumers.

In the past, brands may have gotten away with this, but with conscious consumers leveraging their deciding power and holding brands accountable for ploys like greenwashing, people have become more aware of product manipulation.

It’s not just Toberlone, other brands have also used shrinkflation to keep up with inflation. In 2021, Frito-Lay decreased the number of Doritos chips contained in each bag, which now contains 5 fewer chips making it 130g – a 20g drop from 150g. Frito-Lay commented, “Inflation is hitting everyone… we took just a little bit out of the bag so we can give you the same price and you can keep enjoying your chips.” Thanks Doritos! Before you know it, we’ll be buying more air than crisps in a packet.

Popular chocolate brand, Cadbury, also recently reported the reduced size of their Easter eggs, from 231.5g to 24.9g. Despite a decrease in size of 17.5g for their Flake Easter egg, the price hasn’t been corrected. This is just one example, the brand has apparently decreased the weighting of eight other Easter egg products. What’s more dismal is that the average Cadbury slab which was previously 100g, shrunk to 80g.

Sadly, it’s not just luxury items that we’re getting less quantity and paying more money for. On March 22, 2023, Statistics SA reported that bread and cereal products continue to drive inflation rates. While the annual inflation on bread and cereal has dropped slightly, the monthly price index for maize has increased by 2.2% from January to February.

Bread brands have also been known to use shrinkflation by reducing the number of slices included in bread loaves. Another example is toilet paper, this might be easier to get away with compared to other products, as people aren’t necessarily going to count how many sheets a roll contains.

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Shrinkflation vs. Skimpflation

With the inflation of common household items, brand salience is less valued; people are more likely to be committed to their budgets than choose a brand they have trusted for years if there’s another reputable brand with a more attractive price tag.

Shrinkflation might be a seemingly smart way for brands to cut corners and costs but this isn’t a new phenomenon, brands have been employing marketing tactics and duping customers in the process for years. But with the latest spike in inflation, suppliers are doubling down on shrinkflation and skimpflation. Yes, brands are not only giving us fewer crisps or advertising under the guise of shrinkflation, they are also using skimpflation to bamboozle customers.

Skimpflation is when original recipes and product formulas are revised to ultimately save brands on production costs.

Brands do this by either removing ingredients or compromising the quality of ingredients used. This makes it hard for customers to tell the difference, especially with shifty labels. Misleading messaging like ‘New & Improved Formula’ or ‘Great new look’ is often brandished on product labels to attract customers. So how can we avoid buying into this?

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How Consumers Can Avoid Shrinkflation & Shady Brands

The only way customers can effectively avoid being swindled by shrinkflation and skimpflation is to compare the CPI or Consumer Price Index.

This is something that the Bureau of Labour Statistics takes into account when determining annual inflation costs and it should be something that we as consumers scrutinise, as it impacts us more than we realise. People are more likely to notice a difference in price than the quantity or size of the product, as it has an immediate effect on their shopping budget.

Most consumers take the trouble to compare prices at grocery stores, but with shrinkflation, it’s important to not just take the price into consideration but rather the price per unit for certain products.

Thankfully, there may be hope for local consumers. The Competition Commission is probing into the retail and wholesale prices of certain essential food prices, including bread, maize meal, meat and poultry products, sunflower oil and more. The investigation was announced after releasing their Essential Food Price Monitoring Report for March 2023, which details the cost influx of everyday grocery items since the Covid-19 pandemic. Load shedding impacts have also affected production costs for South African businesses and brands.

There’s no telling whether prices will readjust in the near future, but there are small acts of resistance consumers can make regarding shrinkflation. If you support a certain brand and notice that you’re a victim of shrinkflation, call the brand out on social media. Brands have a responsibility to be transparent with consumers about product changes. No longer satisfied with the quality of a product you once revered? You have the deciding power, take your coins elsewhere and find a brand that aligns with your budget and needs.

Shrinkflation doesn’t make it easy with today’s cost of living; it takes a savvy consumer to see through suspicious messaging to accurately determine whether they’re really scoring a deal or being ripped off. Next time you see a product with a ‘3 for 2’ deal or ‘New & Improved Formula’, ask yourself whether it’s honest advertising or shrinkflation at play.

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