How shrinkflation is duping you into paying more for less

I'm no chocoholic, but when my other half recently presented a 'family' block of chocolate to share over a movie, I did a double-take. Was I imagining it, or was it smaller than I remembered?

It turns out a variety of much-loved grocery items are falling prey to 'shrinkflation' - the sneaky practice of making products smaller while charging the same price.

Shrink-economics has been taking a bite out of chocolate bars for some time.

Back in 2009, Cadbury's family block weighed in at a hefty 250 grams. Today, they are a petite 180 grams.

But it's happening across a range of brands from Smiths chips to the iconic Kellogg's Cornflakes.

Shoppers are even getting a bum-deal on toilet paper, with a number of brands wiping a few sheets from roll sizes.

The practice of downsizing products has been noted by the Australian Bureau of Statistics, which has had to make allowances for shrinkflation when calculating cost of living changes.

As the ABS commented, "When the volume falls but the price remains the same, consumers are essentially paying the same price for lower quality."

There's even a 'Shrinkflation Australia' Facebook page.

And despite displeasure from consumers, there is nothing illegal about the practice at all.

A laser focus on price - not packaging

Hamish Thomson, author of It's Not Always Right to be Right (Wiley), is a former global brand head for Mars Incorporated, the company behind household names like Maltesers, Bounty and Whiskas.

He explains the logic behind shrinkflation, saying, "Consumers are normally more deterred by rises in price than reductions in pack sizes."

In fact, during tough times like the pandemic, Thomson says we're even more likely to maintain a laser focus on shelf prices.

Thomson adds that brands may be forced into pack size reduction in order to maintain profit margins when raw material costs rise or when there are ongoing supply constraints such as we've seen during COVID-19.

However, he adds that there are other reasons why pack sizes can become smaller including the need to meet display efficiencies, which may be driven by retailers, and even changes to regulatory guidelines such as dietary intake recommendations.

'Do no harm'

Companies themselves may try to fend off criticism of shrinkflation claiming the health benefits of smaller portion sizes, or the eco-benefits of less packaging.

But consumers aren't buying it. A few years ago, the Swiss chocolate bar Toblerone made headlines in the UK when the space between the chocolate peaks was increased, shrinking the quantity of chocolate by 10%.

That sort of negative publicity is something brands try desperately to avoid.

Thomson points out, companies face a constant juggling act between delivering value and maintaining profitability.

But he cautions, "Brands need to be very careful when considering any product change. Consumers detest non-value added changes. 'Do no harm' is one of the first mandates a CEO will give their marketing teams when contemplating any product change - including those relating to shrinkflation."

Ways to beat shrinkflation 

When popular products go through the shrinkflation wringer, consumers can end up paying more because we have buy more often.

Fortunately there are ways to limit the impact on household budgets.

Thomson suggests using unit pricing. It's a  great equaliser because it shows the cost per 100 grams, and lets you see at a glance which product offers the best bang for your buck.

Or for pantry staples, think about switching to generic 'no frills' products. At Woolworths for example, you could pay 11 cents per 100 grams for Homebrand white sugar, or close to five times that amount (50 cents per 100 grams) for a branded product.

There is another solution that can let you enjoy considerably more for less - and that's to switch where you shop.

A survey by consumer group Choice found brand name products are 20% cheaper, on average, at Aldi than Coles and Woolworths. Choice spokesperson Rachel Clemons says, "Some products did cost the same at Aldi as they did at Coles and Woolworths, and some were more expensive, but the majority of brand name products we surveyed were cheaper at Aldi. Savings went up to as much as 57%."

It also helps to plan purchases.

The chocolate bar my other half whipped out for movie night was an impulse buy picked up from the local service station - undoubtedly for a premium price.

If he'd planned ahead and purchased a few snacks from Aldi, he would pocketed more for far less. The risk is that he may also have bought home some random purchase like a hickory fired meat smoker from the middle aisle because "Hey, what a bargain!".

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