Shrinkflation

In economics, shrinkflation, also known as package downsizing or weight-out,^[2] is the process of items shrinking in size or quantity while the prices remain the same.^[3][4][5] The word is a portmanteau of the words shrink and inflation. Skimpflation involves a reformulation or other reduction in quality.^[6]

Toblerone chocolate bar, 2006

2016 Toblerone bar from the United Kingdom with larger gaps between peaks, using 10% less chocolate^[1]

Shrinkflation allows manufacturers and retailers to increase their operating margin and profitability by reducing costs whilst maintaining sales volume, and is often used as an alternative to raising prices in line with inflation.^[7] Consumer protection groups are critical of the practice.

Economic definition

 

A parallel to shrinkflation is currency debasement. This graph shows decline in coin silver content over the history of the Roman Empire.

Shrinkflation is a rise in the general price level of goods per unit of weight or volume, brought about by a reduction in the weight or size of the item sold.^{[citation needed]} The price for one piece of the packaged product remains the same. This sometimes does not affect inflation measures such as the consumer price index or Retail Price Index, i.e. it might not increase in the cost of a basket of retail goods and services,^{[citation needed]} but many indicators of price levels and thus inflation are linked to units of volume or weight of products, so that shrinkflation also affects the statistically represented inflation figures.

The first use of the term shrinkflation with its current meaning has been attributed to the economist Pippa Malmgren, though the same term had been used earlier by historian Brian Domitrovic to refer to an economy shrinking while also suffering high inflation.^[8]

Causes

Barak Orbach, an academic economist, argues that competition typically drives shrinkflation: "When supply shocks or other factors inflate production costs, businesses must pass on cost increases to maintain profitability. However, in competitive markets, direct price increases are risky. Under such conditions, businesses often choose to raise prices indirectly through downsizing."^[9]

Without explicitly using the term shrinkflation, macroeconomist Vivek Moorthy much earlier documented and analysed the shrinkage effect of inflation, explaining it by Arthur Okun’s "invisible handshake" approach. Prices are …… based on notions of trust and fairness. it is considered acceptable for firms to respond to cost increases, but not to demand increases. Firms selling a branded product will make deliberate efforts to continue selling at the same price thereby retaining loyal customers. Hence, to cope with inflation, fast moving consumer goods firms would often resort to shrinking the product size to avoid raising prices.^[10]

Consumer impact

 

Many grocery stores provide unit price information for all products. In this Norwegian grocery store, the price for a bottle of ketchup is displayed in terms of the price paid per package (64.90 kr) as well as the paid paid per kilogram (111.90 kr). This allows customers to see how much they will pay and to quickly compare products that have different sizes of packages.

Consumer advocates are critical of shrinkflation because it has the effect of reducing product value by "stealth".^[11] The reduction in pack size is sufficiently small as not to be immediately obvious to regular consumers.^[12] An unchanged price means that most consumers will not immediately notice the higher unit price, which adversely affects consumers' ability to make informed buying choices. Consumers have been found to be deterred more by rises in prices than by reductions in pack sizes, and some customers would rather have a smaller package at the old price than the old package size at a higher price.^[6]

Suppliers and retailers have been called upon to be upfront with customers. According to Ratula Chakraborty, a professor of business management, they should be legally obliged to notify shoppers when pack sizes have been reduced.^[13] In 2023 the French grocery chain Carrefour has started to warn their customers about these practises.^[14][15]

Corporate bodies deflect attention from product shrinkage with "less is more" messaging, for example by claiming health benefits of smaller portions or environmental benefits of less packaging.^[7]

Shrinkflation is not the only cause of reduced package sizes. In some cases, such as junk food, some customers do prefer smaller package sizes.^[6]

In other cases, the change is part of a trend to adjust package sizes. In 2003, Dannon shrunk its yogurt containers from 8 ounces to 6 ounces, because consumers thought their larger product was too expensive overall; many, though not all, of the grocery stores selling it maintained the old price for the smaller product.^[2] Most yogurt manufacturers followed suit, resulting in smaller packages.^[6][2]

Detailed evidence for shrinkflation

The UK Office for National Statistics wrote in 2019, "We identified 206 products that shrank in size and 79 that increased in size between September 2015 and June 2017. There was no trend in the frequency of size changes over this period, which included the EU referendum. The majority of products experiencing size changes were food products and in 2016, we estimated that between 1% and 2.1% of food products in our sample shrank in size, while between 0.3% and 0.7% got bigger. We also observed that prices tended not to change when products changed size, consistent with the idea that some products are undergoing 'shrinkflation'."^[16]

 

Impact of Shrinkflation on CPIH in the UK, with the number of food price quotes that saw a change in package size per month

Instances of shrinkflation

 

An example of shrinkflation: Dove soap bars were made 10% smaller in 2022

• In 2010, Kraft reduced its 200 g Toblerone bar to 170 g.^[17]
• Coffee sold in 1 lb (453.6 g) bags shrank to 400 g or smaller in the 1980s.^[6]
• Tetley tea bags were sold in boxes of 88 instead of 100.^[17]
• Nestlé reduced its After Eight Mint Chocolate Thins box from 200 g to 170 g.^[17]
• Cadbury's Crunchie were sold in packs of three instead of four.^[17]
• In January 2009, Häagen-Dazs announced that it would be reducing the size of their ice cream cartons in the US from 16 US fl oz (470 ml) to 14 US fl oz (410 ml).^[18][19]
• In 2015, Cadbury Fingers removed two fingers from each pack, reducing the weight of a pack from 125 grams to 111 grams.^[20]
• In July 2015, a tub of Cadbury Roses which weighed 975 g in 2011, was reduced to under 730 g, while a tub of Cadbury Heroes was reduced to 695 g. However the price remained the same at around £9.^[21]
• In 2016, Terry's Chocolate Orange was reduced from 175 g to 157 g by changing the moulded shape of each segment to leave an air gap between each piece.^[22]
• In 2016, Mondelez International again reduced the size of the UK 170 g Toblerone bar to 150 g, while the 400 g bar was reduced to 360 g. This was done by enlarging the gap between the chocolate triangles.^[1]
• In 2017, Milka Alpine Milk and Milka Nuts & Raisins got reduced from 300 g to 270 g while Triolade got reduced from 300 g to 280 g, all without changing the bag size.^[23]
• In 2017, McVities reduced the number of Jaffa Cakes in every standard packet from 12 to 10, raising the cost per cake from 9.58 p to 9.9 p.^[24]
• In 2020, Unilever reduced the size of Ben & Jerry's ice-cream tubs in Europe, going from 500 ml to 465 ml, whilst still retaining the RRP of around 5 euros. Despite this, Unilever has publicly criticized rival ice-cream brands for shrinkflation in the United States, where Ben & Jerry's ice-cream is still sold in pint-sized (473 ml) tubs.^[18][19]
• In 2021, General Mills shrunk their family-sized boxes of cereal down from 19.3 ounces to 18.1 ounces. That means the unit cost per ounce of the product has increased, but for the consumer, the average price in the United States remained $2.99.^[25]
• In 2022, Procter & Gamble reduced the number of double-ply sheets per roll of toilet paper from 264 to 244 sheets in the 18-count mega package. This amounts to approximately a roll and a half in the 18-count package.^[26]
• In 2022, Unilever reduced the size of Dove soap bars from 100 g to 90 g, with most retailers either maintaining the same price or increasing prices.^[27]
• CVS Pharmacy reduced the amount of Dextromethorphan and Guaifenesin in their 4 oz Tussin DM cough formulation by half, and then doubled the recommended amount per dosage from 10 ml to 20 ml. The 8 oz bottle remains at previous concentration. The 4 oz bottle is now therapeutically equivalent to one-fourth of the usual 8 oz bottle. The 4oz bottle retails at $1.70/oz and the 8 oz bottle retails at $1.16/oz. ^{[citation needed]}
• In 2023, researchers conducted a study^[28] on products known to have shrunk in size but not in price. They found that the average reduction percentage of the product sizes was 11.84%, which the researchers then applied to various other products to demonstrate the absurd effect of shrinking product sizes.
• In 2023, Mars, Incorporated reduced the weight of their Whiskas cat food by 15%, reducing the weight of each pouch from 100 g to 85 g. The price of the packs did not change. This was applicable to their 12×100 g, 40×100 g, 80×100 g, and individual products for both the "in jelly" and "in gravy" products.^[29]
• In 2023, several large coffee roasters (including Melitta BellaCrema, Norma CaffeCiao) dropped a "100% Arabica" declaration previously residing on some of their coffee packs as a sign of quality and started to blend less expensive Robusta coffee into the mix. To avoid making larger changes to the visual design of the package the Arabica label was replaced by other labeling, keeping the previous ornamental design. In some case, the coffee is still advertised as "100% Arabica" in supermarket flyers in 2024, but is no longer declared so on the actual package.
• In India in 2008, Procter and Gamble reduced the pack size of its detergent Tide from 1 kg to 850 gms while maintaining the same price. Similarly around 2012, Orbit reduced the chewing gum pack size from 6 to 5 units, keeping the price at Rs. 5. In 2013 the staple breakfast item idli was shrunk from 100 g to 75 g, as reported in the Bangalore Mirror. ^[30]

Skimpflation or Shitflation

In October 2021, NPR's Greg Rosalsky from Planet Money proposed the term skimpflation to refer to a degradation in the quality of services while keeping the price constant, such as a hotel offering a more meager breakfast or reducing the frequency of housekeeping.^[31] In 2023, Guardian Money described a number of ingredient changes in British supermarket foods – such as a brand of mayonnaise changing from 9% egg yolk to 6% egg and 1.5% egg yolk – as an example of skimpflation.^[32]

Unlike changes to the size and weight of a product, skimpflation is more difficult to measure in a standardized way, and consequently goes unrecorded in measurements of inflation.^[6]

Conversely, in September 2022, Izabella Kaminska's The Blind Spot published an article that proposed the term shitflation in reference to maintaining a product's price while decreasing quality. This term had already been used in online communities such as Reddit or Twitter since 2020. The article's author, Dario Garcia Giner, proposed that shrinkflation and shitflation spoke to the Grossman-Stieglitz paradox, and argued they were akin to "Trojan horses buried in the heart of mainstream finance — just waiting to tear down the system by discombobulating relative values in the big-data spreadsheets that central bankers and financiers depend on to manage economic allocation."

Popular use of the term

The term shrinkflation has been used by President Joe Biden in 2023 and 2024, blaming companies for deploying this tactic to increase their profits.^[33] Biden's claim has been criticized with critics such as Senator John Thune stating that shrinkflation is not "an explanation for the inflation crisis the president helped create" and that this is "just one more attempt by the president to shift the blame."^[34] The House Judiciary GOP agreed that shrinkflation is occurring but state, "Joe Biden complains about 'shrinkflation', forgetting he is the cause."^[35]

See also

•  Economics portal

• Purchasing power
• Real versus nominal value (economics)
• Deflation
• "The Grocery Shrink Ray"
• Size–weight illusion
• Deceptive packaging
• Consumer protection
• Grundpreisverordnung [de] - German law to specify prices per 1 kilogramm, 1 litre, 1 cubic metre, 1 metre or 1 square metre for easier comparison - part of PAngV
• Enshittification

References

1. "Toblerone triangle change upsets fans". BBC News. 2016-11-08. Retrieved 2016-11-08.
2. https://www.nytimes.com/2003/05/03/business/yogurt-makers-shrink-the-cup-trying-to-turn-less-into-more.html
3. . BBC News. Archived from the original on 2017-07-24.
4. . Perpetual Traveller Overseas. Archived from the original on 2017-12-01. Retrieved 2014-06-08.
5. "Shrinkflation: When less is not more at the grocery store". The Conversation. 2018-05-28. Retrieved 2021-09-14.
6. Smialek, Jeanna (2024-03-01). "Shrinkflation 101: The Economics of Smaller Groceries". The New York Times. While 'shrinkflation' gets measured, 'skimpflation' does not. Shrinking itself is captured in official inflation data, but another sneaky force that costs consumers is getting missed in the statistics. Companies sometimes use cheaper materials to save on costs in a practice some call "skimpflation." That is much harder for the government to measure.
7. "ECB Meets To Tackle Deflation While Ignoring Shrinkflation". London, UK: Goldcore. 2014-09-04. Retrieved 2020-07-07.
8. "That Shrinking Feeling". Merriam Webster Dictionary. Retrieved 2019-01-21.
9. "Do Antitrust Enforcers Know They Induce Shrinkflation?". ProMarket. Retrieved 2024-02-17.
10. Moorthy, Vivek (2017). Applied Macroeconomics Employment, Growth and Inflation (Ist ed.). Delhi: I.K. International Publishing House Pvt.Ltd. pp. Section 3.5 The Rationale for cost based price pp 78.
11. "Shrinkflation – Real Inflation Much Higher Than Reported". London, UK: Goldcore. 2017-06-28. Retrieved 2020-07-07.
12. Sewraz, Reena (2017-02-21). "Shrinkflation: the food and drink items that have shrunk but aren't any cheaper". lovemoney.com. London, UK. Retrieved 2020-07-07. Ratula Chakraborty, senior lecturer in business management at the University of East Anglia, said: "Shrinkflation is a sneaky practice because consumers are not expecting any size changes so do not inspect package sizes unless there is a really noticeable difference."
13. Studman, Anna (2019-02-23). . Which?. London, UK. Archived from the original on 2021-01-18. Retrieved 2020-07-07.
14. "Carrefour warnt vor versteckten Preiserhöhungen". Wirtschaft. Merkur.de (in German). Münchener Zeitungs-Verlag GmbH & Co. KG. 2023-09-09. from the original on 2023-09-16. Retrieved 2023-09-16.
15. Ammann, Lucas (2023-09-15). "Erstmals warnt eine Supermarktkette vor versteckten Preiserhöhungen - Eine französische Supermarktkette hängt Warnschilder aus und warnt somit vor "Shrinkflation". Sogar ein Gesetz ist vorgesehen". Kurier (in Austrian German). from the original on 2023-09-15. Retrieved 2023-09-15.
16. "Shrinkflation: How many of our products are getting smaller?". Office for National Statistics. Retrieved 2021-03-13.
17. "VAT rises but food shrinks". Daily Mirror. 2010-12-19. Retrieved 2014-06-09.
18. York, Emily Bryson (2009-03-09). "Ben and Jerry's Calls Out Haagen-Dazs on Shrinkage". adage.com. Advertising Age. Retrieved 2015-11-22.
19. "Ben and Jerry's vs. Haagen-Dazs: A Pint-Sized Battle". popsugar.com. POPsugar. 2009-03-10. Retrieved 2015-11-22.
20. "There are now TWO fewer Cadbury Fingers in every pack". 2015-04-14.
21. "Cadbury take ELEVEN CHOCS from Heroes and Roses tubs but price stays same". Daily Express. 2015-07-20. Retrieved 2016-11-27.
22. "Terry's Chocolate Orange doubles in price in some supermarkets". inews.co.uk. 2017-11-27. Retrieved 2019-10-24.
23. Milka se nenápadně zmenšuje, cena ale zůstává stejná. Obalové triky jen tak nepoznáte - Aktuálně.cz
24. "Jaffa Cakes packet size reduced in latest 'shrinkflation' move". The Guardian. 2017-09-26. Retrieved 2017-09-26.
25. Rosalsky, Greg (2021-07-06). "Beware Of 'Shrinkflation,' Inflation's Devious Cousin". Planet Money. NPR. Retrieved 2021-07-07.
26. Kavilanz, Parija (2022-03-08). "Your toilet paper roll is slimming down". CNN Business. Retrieved 2022-03-08.
27. Leonard-Bedwell, Niamh. "Unilever shrinks Dove Beauty Bar packs as cost inflation bites". The Grocer. Retrieved 2023-07-31.
28. "Visualizing Shrinkflation in Different Industries". Coventry Direct. 2023-06-06. Retrieved 2023-08-25.
29. "Whiskas shaves 15g off packets – but still charges same price". The Telegraph. 2023-01-26. Retrieved 2023-04-07.
30. Moorthy Vivek "Understanding Stagflation—Past and Present" McGraw Hill Education (India) 2014, pp. 79-80 ISBN 978-93-392-0334-4
31. Rosalsky, Greg (2021-10-26). "Meet skimpflation: A reason inflation is worse than the government says it is". NPR. Retrieved 2021-10-30.
32. Osborne, Hilary (2023-07-22). "'Skimpflation': how supermarkets reduce the quality of what you buy". The Guardian. Retrieved 2023-08-11.
33. "Biden calls out 'shrinkflation' as part of a broader strategy to reframe how voters view the economy". AP News. 2024-03-08. Retrieved 2024-03-14.
34. "Thune: President Biden Doubles Down on Failed Policies". U.S. Senator John Thune. Retrieved 2024-03-14.
35. Reporter, Natalie Venegas Weekend (2024-02-11). "Conservatives mock Biden's "shrinkflation" video about Super Bowl snacks". Newsweek. Retrieved 2024-03-14.

External links

• The impact of Shrinkflation on the CPIH: January 2012 to June 2017
• Shrinkflation – the economics of stealing from customers