Smaller packaging, same price: curse of ‘shrinkflation’ hits shopping carts | Business


Shoppers should beware of supermarkets and food brands that squeeze through price hikes by downsizing packaging – known as “shrinkflation” – as they battle rising raw material costs, energy and labor, analysts warned.

Food giants, faced with soaring prices for commodities such as oil and flour, along with record electricity prices, choose to downsize packaging and increase case prices , adding to the wave of inflationary pressures hitting households.

Recent examples include Walkers, who cut two bags of crisps from their 24-bag multipacks while the price remained at £ 3.50. Smith’s Frazzles and Chipsticks now sell in a six-bag pack instead of eight for £ 1. KP Peanut Packets are now 225g instead of 250g for £ 2.50.

Persil now has 75g less detergent in a box for the same price of around £ 5, meaning buyers now get 37 washes per pack, up from 40. Tesco has reduced the weight of its mozzarella cheese pack 70p from 270g to 240g, an effective price increase of 12.5%.

A spokesperson for Persil said it reduced the amount of powder in its packages after making the formula more concentrated so that a smaller amount could be used for each wash. Persil added, “Pricing is always at the discretion of the retailer.”

Steve Dresser, Analyst at Grocery Insight, said: “At the end of the day, the customer, although they don’t pay more, don’t get the same value, so they lose out. Your purchase invoice may not have increased, but your package has decreased by 20-30g.

Salty snacks saw one of the biggest price increases on grocery shelves in the four weeks to September 5, up 7.6% according to Kantar analysts, while crisps rose 5%. , 4%. Rising oil prices are also likely to affect the price of laundry products, while other areas likely to see price increases include cat food, canned colas, yogurt and household care. skin, as well as pasta and other wheat products, for which prices have skyrocketed. these last weeks.

Package sizes are often reduced by brands due to short-term pressures such as an increase in the cost of ingredients, but their size is rarely increased once that pressure decreases.

A recent study suggested that 90% of UK adults were irritated by signs of shrinkage, which led Cadbury to put five creamed eggs in a box at Easter instead of six.

But Bryan Roberts, retail analyst at Shopfloor Insights, said supermarket suppliers often see it as an easier way to offset higher costs than just increasing prices.

Dresser said, “Nobody wants to raise prices, but if you look at the pressures that follow, it’s difficult. There is a combination of factors: petroleum, which is used in many products, is skyrocketing; fuel, CO2 problems, which have led to significant price hikes for producers of fresh food and soft drinks, labor shortages and wage increases – these costs are now in the chain. supply.

“Retailers and suppliers have a specific price they want to hit, say £ 1, and may need to adapt packaging or package sizes to hit that £ 1. “

Dresser said brands and retailers were likely to be tempted to introduce shrinkage to compensate for these price increases, but adaptation of packaging and products took longer than other methods of price increases. price.

Dresser said retailers can, and have already turned to other techniques beyond absolute price increases, including reducing the number of promotions or reducing the level of discount, such as dropping offers from three items for the price of two to four. for the price of three. They could also introduce a wider range of private label products, where retailers make higher profits, as a cheaper alternative to brands.

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Sue Davies of the consumer rights group Which? said, “Consumers are facing sufficient financial pressure due to the rising cost of living without having to check pack sizes when doing their weekly shopping.

“Manufacturers and retailers may have legitimate reasons to change the size of their products, but they need to be upfront with their customers so people can make an informed choice about how to spend their money. “

KP declined to comment. Walkers and Tesco have been approached for comment.

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