Shrinkflation – it’s here and it’s getting bigger (smaller)
While shoppers fixate on the rising cost of their weekly food bill, another far more clandestine price increase is sneaking into their shopping trolley.
Known as “shrinkflation”, food companies are regularly reducing the size of their products but not the price, burdening consumers already grappling with surging household costs.
A growing list of companies are doing so to pass on costs and increase profits by avoiding a sensitive price hike that is more likely to attract the ire of customers.
Australia’s SunRice, the consumer brand for one of the world’s biggest rice companies, Ricegrowers, recently reduced the contents of its Mini Bites range by 25%.
The retail price for the popular item for kids’ lunch boxes has stayed the same.
“Due to increased input costs, including well-documented energy price rises, we made the difficult decision to decrease the pack size of our Mini Bites in line with similar products in the category,” a SunRice spokesperson said.
“Rather than increasing the price our customers pay, we chose to keep our product price the same.”
The SunRice changes are rolling out across supermarkets, the latest in a line of changes from major food companies implemented during the pandemic and subsequent inflationary period.
In many supermarkets, the 500g jars of Cottee’s jams were recently replaced with 375g alternatives, representing a 25% decrease in size. The shelf price fell less than 7%.
Cottee’s owner, the American multinational Kraft Heinz, was contacted for comment.
Mars bars, Ritz original crackers and Helga’s wraps are among dozens of other items that have reduced in size but not price, according to grocery comparison app Frugl.
Most changes are never publicised, leaving shoppers to detect the changes.
Maxibon, part of Froneri-owned Peters Ice Cream, did out itself in March shortly before reducing the size of its product from 102g to 94g, which it attributed to increased costs.
As it announced the change, Maxibon even included a few pleasantries customers might want to throw at it, such as “MaxiCon”, “MaxiGone” and “Maxiflation”.
Shrinkflation is not without consequence. When the Australian Bureau of Statistics tracks the prices of goods and services that make up household costs, it takes into account changes in product sizes.
They are treated as a price increase, given the end result is that customers receive less for their money or need to buy more to compensate.
The issue is global, with two-thirds of shoppers in the UK noticing products shrinking in size, while prices either remained the same or even increased.
Rising food prices have come under recent scrutiny amid evidence supermarkets have used the pandemic and subsequent cost-of-living crisis to not only sell more goods, but also increase their profit from sales. Critics say this is evidence of inflationary profiteering, although there has been sparse response from the government or regulators.
In France, big food manufacturers pledged to lower prices amid a threat from the government to impose financial sanctions, given prices of many wholesale foods have been falling for months.
There are also concerns over the way Australian supermarkets use promotions to entice shoppers during a cost-of-living crisis, with some specials not necessarily representing a good deal.
The sector is dominated by Coles and Woolworths, which collectively control two-thirds of the market.
When it comes to a major company like SunRice, it’s unclear why it needs to reduce a product’s size by a quarter given its rice food division, which produces Mini Bites, has recorded strong profits.
“The segment maintained its increased profitability driven by a reduction in source materials associated with these products, notably due to the returning availability of lower cost broken rice used in rice flour,” SunRice said in an April trading update.
At its most recent half-year results, SunRice’s overall revenue climbed 34%, while net profit increased by almost 17%.
SunRice declined to comment on the division’s profitability.
Ian Jarratt, a prominent consumer advocate, said consumers can use unit pricing data to spot a shrinking product.
“It is a sneaky way to get a price rise,” said Jarratt, from the Queensland Consumers Association.
“If people know a few unit prices, then they soon spot when shrinkflation is occurring.”
Unit pricing, which became mandatory in Australia after a 2008 inquiry, requires major grocery retailers to display a price per unit measurement in addition to the sale price.
For example, a 500g jar of Cottee’s jam used to cost 60 cents per 100g. The new 375g jar sells for 75 cents per 100g. The diminished jar appears in Coles’ “everyday” category, implying it is a low price.
Shoppers are encouraged to look out for changed packaging and buzzwords like “new” on the box or packet, which can be a giveaway that a product has shrank but has probably retained its old price.
There is no legal requirement for food manufacturers to alert customers of a change in product size, so long as the new quantity and unit price is appropriately displayed.
Coles is about to start selling the revamped Mini Bites snack. It is already on Woolworths shelves, marked with “low price” tags despite a sharp increase in unit price.
“In the current inflationary environment, we have seen many suppliers passing on rising costs to us through cost price increases; alternatively, some suppliers have chosen to address their rising costs through product size reduction while maintaining the same cost price to us,” a Woolworths spokesperson said.
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