Will ‘shrinkflation’ grow into a big problem for CPG brands?
With no sign of inflation abating, manufacturers have started to shrink package sizes while keeping prices the same — and customers are starting to notice.
Local news stations around the country are citing notable increases in “shrinkflation”. Northern Michigan’s ABC affiliate UpNorthLive reports that StarKist* tuna cans are 17 percent smaller, Dannon yogurt is 14 percent smaller, a party-sized bag of Lay’s chips and a jar of Ragu are both 14 percent smaller. Charmin toilet paper jumbo packs have been reduced by 24 sheets per roll, Keebler cookies contain 18 percent less per pack and Breyer’s ice cream is 25 percent smaller. The report does not indicate the precise start date of the observed shrinkflation, but marketing and logistics expert Mark Spieles described shrinkflation as a strategy companies are using today in response to inflation.
Grocery stores in Denver are experiencing a “surge” of shrinkflation, according to a report by KDVR.
Shrinkflation is not a phenomenon entirely unseen outside of today’s broadly inflationary economic circumstances.
Cadbury in 2019, more than a year before the pandemic began rattling the global economy, publicly admitted reducing the size of its iconic Cadbury Creme Egg by 11 percent while only reducing the price by 2.5 percent, as a reaction to increasing ingredient and production costs, according to the Daily Mail.
While shrinkflation allows CPG companies to maintain margins without visibly increasing prices, such moves do not always go unnoticed by shoppers and have, in some instances, led to significant blowback beyond just public relations damage.
In 2015 a class action lawsuit was brought against seasoning maker McCormick in reaction to the company’s reduction of the amount of black pepper in its containers by 25 percent, despite keeping the container the same size, according to a 2017 report on shrinkflation by finance consultancy Oxera. While the new, reduced weight was written on the container, the class action alleged that customers had come to expect the same amount of pepper from each container, given that they had been in use for decades.
*On 5/9/2022, a representative of StarKist reached out to RetailWire, stating “the brand has not changed packaging sizes in over a decade.”
- Special Report: Striking back against “Shrinkflation” – UpNorthLive
- Latest ‘shrinkflation’ surge hits grocery stores – KDVR
- Cadbury’s Easter eggs get a lot smaller but only a little bit cheaper – but the company claims they had to shrink to keep them ‘affordable’ for customers – Daily Mail
- Shrinkflation! A Bite Missing? – Oxera
DISCUSSION QUESTIONS: Is it a good move for CPGs to reduce the amount of product in packages rather than raising prices at this point in time? How should CPGs respond in the face of criticism surrounding shrinkflation?