Inflation is defined as a steady increase in price levels of all goods and services in an economy, over a given time period. In an effort to combat inflation, packaged fast food producing giants have given birth to a new phenomenon called “Shrinkflation” that involves“manufacturers reducing the package size of household goods while keeping the price the same” (Digital, O. 2017)
Fig. 1
Companies claim that prices of raw materials have risen. In November 2016, Toblerone reduced the size of their products by 10%, with the price remaining same. In their defence they said that “We are experiencing higher costs for numerous ingredients” and so “to ensure Toblerone remains on-shelf, is affordable and retains the triangular shape, we have had to reduce the weight of just two of our bars in the UK, from the wider range of available Toblerone products” (Digital, O. 2017). Similar responses were seen by other companies such as Mars Inc.
The rising cost of raw materials is a fairly valid reason for reducing packaged sizes. However, the argument posed by companies about keeping products affordable for consumers, instead of raising prices, seems more of a marketing stunt than an effort to ensure consumer satisfaction. I say this because it seems as if these corporations conveniently adjusted their costs and didn’t lose a single penny. It is the consumers who lose out by receiving lesser quantity. By marginally reducing package sizes, they created an illusion to trick consumers at first. When an average consumer walks into a store and picks up a pack of chocolates, it’s hard for them to notice the difference in size, and so they end up buying it. On the other hand, if prices were hiked up by 10%, the consumer would immediately realize that they are now paying more for the same packet and possibly make them think twice before buying it. In addition, in the case of chocolate producers, it is hard to believe that “their raw material costs went up” even though cocoa and sugar prices have dropped since 2015, as seen in Fig. 2, and Fig. 3.
Fig. 2
Fig. 3
Strangely enough, Mcvities’ 300g chocolate biscuit packet had its size reduced by 6% but its price was reduced by 10% (“Lawrie, E., 2017″). This technically implies that consumers are now paying lesser for the same quantity. This example got me thinking that perhaps “shrinkflation” isn’t all that bad for consumers. In fact, smaller serving sizes of high-calorie foods like chocolates and biscuits would perhaps help reduce obesity and promote healthier lifestyles among consumers.
(“Toblerone, 2017”)
Works Cited:
Digital, O. (n.d.). Shrinkflation and the changing cost of chocolate. Retrieved September 26, 2017, from https://visual.ons.gov.uk/shrinkflation-and-the-changing-cost-of-chocolate/
Lawrie, E. (2017, July 24). Five products hit by shrinkflation. Retrieved September 26, 2017, from http://www.bbc.com/news/entertainment-arts-40709180
Toblerone. (2017, September 23). Retrieved September 26, 2017, from https://en.wikipedia.org/wiki/Toblerone