Shrinkflation: what it is and how it works

What is shrinkflation? This is a new marketing technique used by companies to maximize profits.

The term was coined by merging the words shrinkage, or contraction, and inflation, increase in prices. Shrinkflation is defined as a marketing technique that large companies, both national and international, increasingly use to increase profit margins.

In this article, we’ll look at a short description of the phenomenon and some examples of consumer goods that have been affected by the practice of shrinkflation, together with an analysis of the controversies that the latter is fueling at the international.

What is shrinkflation?

As the term itself suggests, which links the concepts of contraction and inflation together, shrinkflation is a process of reducing the size of large-scale consumer goods, with prices that however remain unchanged and, in some cases, are even retouched upwards.

In most cases, this reduction does not directly affect the size of a product, but rather the units of that product included in a package. For example, the number of biscuits or tissues in a package. In other cases, however, it is the size of the product itself that varies, such as the grams of chocolate, honey, sugar, or jams in the respective containers.

With this technique, in short, companies cope with the consumption crisis, aggravated by the pandemic. Selling a product of smaller dimensions than in the past, but at the same price, allows you to ensure a wider profit margin, and often without the consumer being able to notice the difference, given that in many cases it involves a minimum variation. With a significant impact, however, on an industrial scale.

From Toblerone to Coca-Cola, “shrunken” products

Some examples, that concern both products reduced in size and those reduced in number: Toblerone, a chocolate bar produced by Kraft, went from 200 to 170 grams in 2010, and then dropped to 150, marking a - 25% in quantity compared to the original in 2016. The 400-gram maxi version has also been reduced to 360.

Other examples are those of Milka chocolate, which has gone from 300 to 270 grams in its standard packaging, Coca-Cola, with the 2-liter bottle now down to 1.75, Kellog’s Coco Pops and the Magnum and the Cornetto Algida, all “lighter” than in the past.

However, companies do not always recognize the reasons for the size reduction: Kellogg, for example, justified cutting the weight of Coco Pops with the reduction in sugar present in the package, while Unilever - owner of the Algida brand - spoke of the need to reduce the caloric intake of ice creams.

The reaction of institutions to shrinkflation

Beyond some particular cases, such as the last two mentioned, it is clear that shrinkflation responds to companies’ need to maximize profits, selling consumers - mostly unaware - a smaller product at the same price. In short, a sort of deception, which has already caused an outcry from European institutions and organizations.

The picture, moreover, is clear: already in 2017 the British Institute for Statistics had sounded the alarm about shrinkflation, going so far as to observe 2,500 packages of products reduced by weight or quantity, while Istat, in the period 2012-2017, detected 7,306 similar cases, in 4,983 of which the price was seen as rising.

Original article published on Money.it Italy 2021-08-19 16:09:00. Original title: Shrinkflation: che cos’è e come funziona