A silent practice is currently stalking the UK food and grocery sector, breaking the back of oblivious shoppers who are already struggling with higher energy bills and rising prices. The only thing about this practice is that it comes stealthily and goes unnoticed.
“Shrinkflation” or downsizing is a decades-old strategy, deployed most-often by food manufacturers and producers of consumer staples. As the global ramp-up in economic activity post-pandemic drives up food prices and transportation costs, reports of shrinkflation are on the rise, once again.
Prices of furniture, household necessities, electronics, and nearly all other consumer goods are set to rise this year in a perfect storm of shipping delays, supply chain disruptions and shifts in demand. Some companies, like Procter & Gamble, Nestle and most recently, Unilever, have warned upfront of an impending price rise in the coming months.
Fixing the leaks
When it comes to tackling rising input costs, most companies usually have three options. One, raising the price, knowing consumers will see it and grumble about it. Two, giving them a little bit less and accomplishing the same thing (watch out for how certain brands of coffee charge the same now for 200g instead of 227g). Three: value substitution, meaning the use of cheaper and inferior ingredients – a riskier move, especially in the food segment.
In 2018, a new tax on sugar led to shrinkage of Coca-Cola bottles, but shoppers accepted it anyhow in comparison to rival drinks manufacturer IrnBru that went the reformulation route and instead added an artificial sweetener, suffering a backlash against the decision.
But increasing the price brings its own set of shortcomings. If the price goes above a certain threshold – sometimes even a very small change– the change is noticed and consumers move to cheaper brands.
It is reducing the size of the offering while keeping the same price that seems the safest option.
Shrinkflation is the phenomenon of products being shrunk in size due to a price spike in resources. As prices inflate, many manufacturers often choose to downsize packaging and portion sizes while keeping the price and look of the packaging the same so that shoppers don’t notice any change.
After all, shoppers are more conscious of changes in prices than changes in weight.
It’s actually pretty sneaky when you think about it!
Like, in the case of crisp multipacks by various brands. One producer’s previous multipacks contained six salt and vinegar, six cheese and onion, six ready salted and six prawn cocktails but this has now been changed while the price remains the same, with the shoppers now charged £3.50 for 22 bags instead of 24, as per reports.
Examples abound of snacks of six packs being cut from eight but while still costing £1. Many manufacturers are left to tackle rising costs to resort to this strategy. Else they will lose customers.
Representative iStock image
The key to the curious case of shrinkflation lies not only in the rise in cost but also in certain peculiarities of human perception and some unsettling trends in business. Last Christmas, Cadbury reportedly shrank the size of its selection box Fudge bars by 12 per cent to help “tackle childhood obesity”, saying the product was “typically bought for children”. However, the brand soon was accused of indulging in shrinkflation under the garb of social consciousness as it did not reduce the price to match the reduced size.
When Kraft slashed the weight of Toblerone from 200g to175g a few years ago by changing their distinctive row of chocolate mountain peaks and making the gap wider, media and the public hit the roof. The bar was reverted to its original shape a few months later, but with a higher price.
Toilet paper companies often shred down the number of sheets per roll subtly, saying paper is supposedly now “so fluffy” that it couldn't fit in people's toilet paper holders without a reduction in length, consumer rights lawyer Edgar Dworsky told the BBC. His claim resonated with a revelation by consumer watchdog Which? that some brands of toilet paper have lost up to 14 per cent of the number of sheets per roll over two years, without any corresponding drop in price.
Nothing New Here
Shrinkflation isn't new. It has a long history that has led to smaller toilet paper rolls, candy bars and potato chip bags over the years.
According to the UK’s Office of National Statistics, more than 200 different consumer products from toilet roll to chocolate became smaller between September 2015 and June 2017.
Breads and cereals were the most likely to shrink over time, followed by personal care products and meat, as per the pattern seen in ONS data, which cited several high-profile examples, including Mars shrinking its Maltesers, M&Ms and Minstrels chocolates by up to 15 per cent while McVitie’s cut the number of Jaffa Cakes in a packet from 12 to 10.
Tropicana reportedly had also cut the size of its fruit juice cartons while Doritos shrank the weight of the tortilla chips in each packet –and both cited foreign exchange rates among the reasons.
Cereal boxes and crisp packs of same size as before, but only emerging half full over the years are not an unusual sight.
Shrinkflation 2021
With food prices touching sky high figures worldwide, financial experts opine that manufacturers once again are trying to protect their margins as they face rising input and transportation costs tied to the economic recovery post Brexit and pandemic.
Food prices worldwide were nearly 34 per cent higher in June this year compared to the same month in 2020, according to the Food and Agriculture Organization of the United Nations (FAO).
The cost of moving products has been soaring as well due to a combination of higher fuel prices and supply-chain backlogs. The cost of shipping a 40-foot container across the world has more than quadrupled since July last year, according to one UK shipping consulting firm.
The issue is biting Americans as well since their cereal boxes have reduced and ice creams have gone missing from their tubs as companies are offloading some of the higher costs onto clients and consumers.
Grocery prices in the UK rose by 1.7 per cent during the past four weeks compared to 2020, leaving the average shopper paying an extra £5.94, according to data from market insights firm Kantar.
Representative iStock image
Manufacturers are coping the rising cost in their own ways – some via higher prices and some stealthily by trimming product sizes.
The boss of Nestlé – which owns brands including KitKat and Nescafé, as well as pet foods Felix and Purina, recently admitted that the firm may have to cut the sizes of some of its products to help the business cope with increasing costs.
Unilever has also alluded to shrinkflation among cost-management tools when its CEO Alan Jope was reported to have revealed “smaller fill for the same price” as one of the five revenue-management tools to “land price”.
Convenience store owners also confirm the packs are shrinking at a high speed.
A few years ago, Terry’s Chocolate Orange reduced in size from 175gto 157g, reports said. Mars Bars aren’t quite what they used to be: originally 62.5 grams, the well-loved confectionery star has now shrunk to 51g after an interim period of weighing in at 57g – with Mars hopefully claiming it will also help to shrink the waistlines of consumers.
The Quality Street “tin” pack (now plastic) has reduced to almost half to 650g from 1200g it used to be back in 1998. Snack sharing bags are often sharing 20g lighter. Toilet tissues are almost 21 sheets fewer per roll over the years, as per reports.
In the age of social media, downsizing gets highlighted on Twitter and Reddit as well. Like, a UK-based Twitter user pointed out recently that medium milk bottles are supposed to be 2 pints but now some of the brands are downsizing them to 1 litre but still charging the same amount.
While these changes sometimes get noticed and irks consumers (a study earlier this year claims that nine in 10 Brits are furious over this tactic), the practice has its own upside as well.
Shrinkflation creates a scenario where firms as well as retailers gain since price competition gets reduced.
Representative iStock image
While high demand consumers end up buying more packs ensuring more footfalls and more sales for retailers, for low demand consumers, the amount in shrunk packs usually matches their actual need.
Plus, it is a good practice for health freaks as they automatically brings in portion control, especially with people who can’t control intake of indulgent goods like cookies or ice creams. So, the manufacturer here helps to control it by giving smaller packages. Seems like a win-win situation if you see it this way!
As Yael Zemack-Rugar, Associate Professor of Marketing at University of Central Florida, pointed out in a podcast recently, smaller packages are in a way “good things, a service to consumers”.
“There are no 100-calorie packs for carrots, but there are usually for Oreos. And why, because we know we can’t control our own consumption of these indulgent goods, cookies, ice cream. So, the manufacturer helps us control it by giving us a small package.
“We know once we open a package, it’s very hard for us to stop. And those little packages serve as a stopping point.
“And I think that’s one of the ways from a behavioral perspective that marketers can think about how to position smaller packages as a good thing, as a service to the consumer, as an improvement and innovation in their product,” Zemack-Rugar said in the podcast.
Smaller can be better
No matter how devilish it sounds, calling shrinkflation fraud or misrepresentation of facts will be an overstatement since weight, volume or quantity is always labelled on the packaging. It’s not illegal- it’s just sneaky.
Plus, this practice helps producers and in turn retailers to cope up with intense competition and thereby retain their customers. It also helps the manufacturers to maintain their profit levels even after spike in input costs.
Over the years, shrinkflation has become an established trend in Britain and world wise as producers try to tackle rising input cost and keep the sales afloat- both for themselves as well as for retailers and convenience store-owners. May be, we all are better off with smaller packages!
Local shops will face significant new pressures as a result of today’s Budget, the Association of Convenience Stores (ACS) has warned.
Chancellor Rachel Reeves' budget's impact will be felt unevenly across the UK’s 50,000 convenience stores, with some measures such as business rate relief and the increased employment allowance mitigating costs for smaller independent stores, while providing no help for chains and larger independent businesses.
The key measures for local shops announced by the Chancellor, and the costs for local shops associated with them, are:
National Living Wage to increase to £12.21 per hour
National Minimum Wage (18-20 rate) to increase to £10 per hour
Cost to the convenience sector next year: £7.739bn (increase of £513m)
Employers’ National Insurance Contributions to rise to 15 per cent
Threshold for Employers’ National Insurance contributions to fall to £5,000 per year
Employment Allowance to rise to £10,500 a year
Cost to the convenience sector next year: £397m (increase of £85m)
Retail and hospitality rate relief reduced from 75 per cent to 40 per cent
Small business multiplier frozen for 2025/26
Cost to the convenience sector: £267m (increase of £68m)
Total cost of main announcements (year-on-year difference): £666m
ACS Chief Executive James Lowman said: “The cold hard facts are that the measures announced in the past 24 hours have added two-thirds of a billion pounds to the direct cost base of the UK’s local shops. At a time when trade is tough and operating costs are stubbornly high, this will be challenging for our members to absorb and there will be some casualties on high streets and in villages and estates across the country.
“Not all shops will be impacted the same. The smallest retailers, with low NICs bills and lower rateable values for their shops, will benefit from the welcome increase in the employment allowance and the retention of 40% of the retail, hospitality and leisure business rates relief. Retailers with a larger store, a number of sites or those operating a chain will receive limited benefit from these mitigations, and this will impact their ability to invest and to continue to offer services in the communities they serve.
The following additional measures were announced by the Chancellor in the Budget speech today:
Flat rate levy on vaping liquids from October 2026 of £2.20 per 10ml
Fuel duty frozen and the 5p cut extended for another year
A new commitment to tackling shop theft and funding directed to tackling organised gangs
Lowman continued: “The Chancellor’s commitment to tackling shop theft will be warmly welcomed by our members, but they are interested only in action and in crime against their stores and their colleagues being tackled effectively. We stand ready to help implement a new, and better-funded strategy to stop shop theft, abuse and violence against our members.”
Parliament is to launch an inquiry into delays in compensation settlements for sub postmasters affected by the Horizon scandal.
The newly-formed Business and Trade Select Committee will call ministers, subpostmasters and their lawyers to give evidence next week with a second session to follow in mid-November. The Committee’s chair, Liam Byrne MP told ITV News that there was “definitely a delay” in people coming forward for payment.
“What we’re hearing from subpostmasters is that if there is an argument about how much should be paid out, the first offer is made quite quickly but if there’s a negotiation, that negotiation is dragging.
“We on the committee are going to batter away at this, week in, week out, until it is job done. All of us on our committee are frankly horrified and outraged by how long this has taken and we’re just not going to give up, ” he said.
Sir Alan Bates, the Post Office campaigner and chair of the Justice for Subpostmasters Alliance, is expected to be invited to give evidence. Earlier this month, Sir Alan states that his own claim had not been addressed and that he had written to prime minister Sir Keir Starmer asking for his intervention.
“Like many of the groups, my claim has not been completed. It’s ridiculous. I am one of just many in this position. This is why I wrote to the Prime Minister at the start of October, asking that he instruct the department to ensure that all claims – and I’m talking about in the GLO group, the original 555 – have been completed by March next year," he said.
This comes weeks after the Post Office's outgoing CEO agreed the government is using the company as a "shield" over compensation schemes. Nick Read, who resigned last month, was giving evidence at the Post Office Horizon IT Inquiry for the second day, with a focus on delays to victims' financial redress.
He also admitted that the compensation process has been "overly bureaucratic" and expressed "deep regret" that the Post Office had not lived up to delivering "speedy and fair redress".
Convenience store body Association of Convenience Stores (ACS) today (30) has warned the Chancellor about the negative effects of the new National Living Wage (NLW) increase, a day after the Chancellor announced a pay rise for over 3 million workers next year, with NLW rates rising by 6.7 perc cent.
From April 2025, the NLW will increase from £11.44 to £12.21 while 18-20 National Minimum Wage will rise by £1.40 per hour to £10 - the largest increase on record, marking the first step towards a single adult rate.
ACS chief executive James Lowman said, “Our members are grappling with how to afford this inflation-busting increase in wage costs. The market remains tough, with many retailers reporting flat or declining sales while expenses like banking charges, credit card processing fees and energy bills are eating away at their profitability.
"More than ever, we need help from the Chancellor in the Budget. Without sustained and enhanced help on business rates, a reduction in National Insurance Contributions, and effective incentives to drive investment, our sector faces a challenging future. For some communities, this could mean the viability of their local shop is put at risk.”
Evidence provided to the Low Pay Commission by ACS earlier this year already found that to handle the increases in national wage increases, 53 per cent of retailers have reduced the amount they invest in their business, 53 per cent have been forced to increase their prices in store, and 47 per cent have had to take lower profits.
Baroness Philippa Stroud, Chair of the Low Pay Commission (LPC), stated that data already shows signs of employers finding it harder to adapt to minimum wage increases.
A Rossendale shop has had a licence bid rejected after repeatedly selling vapes to children and having illegal products on its premises.
Management at the Ibra Superstore at 34 Burnley Road, Bacup, have shown ‘no regard’ for children’s protection and safety, and have insufficient controls for licensing, Rossendale councillors have ruled.
Ibrahim Mohammad, director of the Ibra Superstore, had recently applied to Rossendale Council for a new premises licence. But the borough’s licensing sub-committee rejected his bid after a meeting which heard allegations from the police and trading standards officers.
The Burnley Road shop has been subject to various licensing changes and concerns in recent years. In the past, it was called Bacup Wines.
Ibrahim Mohammad, the applicant, attended the Rossendale licensing sub-committe meeting with his father,Amin Mohammad. Also there was PC Mick Jones, of Lancashire Constabulary, and Jason Middleton of Lancashire Trading Standards. Councillor Bob Bauld attended as an observer.
Mr Mohammad wanted a premises license for alcohol sales and opening hours from 8am to 11pm, seven days a week. He already had a personal licence. He said the Bacup shop would install a CCTV system, keep an incident log and a refusals record, check customers’ ages, display information about staff and give them regular training.
Trading standards officer Jason Middleton said Ibra Superstore Ltd was incorporated as a company in April 2023. Since then, trading standards had received 11 complaints about under-age sales and carried out visits.
Breaches included non-compliant vapes being found which broke a 2ml limit on the quantity of nicotine-containing liquid, no age checks and no information on display.
During one visit, Amin Mohammad tried to leave with a bag containing 10 illegal vapes. In test purchases by trading standards, an ‘Elf Bar’ vape was sold to a 14-year-old by Amin Mohammad and an illegal Hayati Pro Max vape to a 13-year-old by Ibrahim Mohammad. The shop claimed a phone call distracted staff during the 13-year-old’s purchase and illegal vapes came from ‘a man in car’.
Councillors heard different speakers, looked at written reports and also some video footage from the applicant. But they rejected the premises licence bid.
Giving their reasons, they stated: “There was a repeated history and pattern of behaviour regarding under-age sales of age-restricted items, such as tobacco products and vapes to children. You must not sell vapes to anyone under the age of 18. This is a criminal offence which the council takes very seriously.
“It is clear you breached the law by failing a test purchase operation in which you sold an illegal vape to an under-age child. The sub-committee feels that you have no regard to the protection and safety of children.
“The sub-committee feels that there is insufficient management control at the premises. There is no credible system to prevent under-age sales of age-restricted products and no measures in place to avoid harm to children and to prevent crime and disorder
“Therefore, given the number of incidents, the circumstances surrounding the incidents and the fact that the matter involves safeguarding issues relating to young, vulnerable minors, we consider that the seriousness of the incidents and the crimes committed against young children undermines the licensing objectives to prevent crime and disorder, and protect children from harm.”
The shop has the right of appeal to a magistrates court within 21 days of the date of the notice.
SPAR North of England retailer Dara Singh Randhawa’s family store has been awarded £100,000 of free stock after hitting all his targets since moving to the symbol.
Dara and his family, who have their SPAR store in Patrington in the East Riding of Yorkshire, joined SPAR through its association with James Hall & Co. Ltd in August 2023 having taken the decision to maximise the store’s potential.
It is a decision they have not looked back on, with sales increasing by up to 25% and margins also showing significant uplift in the last 12 months.
Key to the store’s improved performance is the complete overhaul of products available in-store, particularly the fresh food range, to better support people who live in Patrington and the surrounding area.
A new store layout and refrigeration, better Food To Go and meal deal options, a coffee machine, and a Calippo slush machine were also installed during a major refurbishment prior to launch.
Dara said: “Our move to SPAR has been excellent. We have seen fantastic sales uplift and the support from the team at James Hall & Co. Ltd has been brilliant. The £100,000 of free stock is the cherry on the cake.
“We have been very impressed with the Price Locked promotions, in particular. These give customers confidence to do bigger shops with us as they see value on our shelves and the products at the same prices for longer.
“At times over the summer when tourists and visitors to the area add trade, we have seen sales £6,000 a week higher than our average. This is against a backdrop of the popular caravan park in the village being closed almost all year.
“We are really pleased with the position we are in, and we will be looking to achieve more in 2025.”
Peter Dodding, Sales Director at James Hall & Co. Ltd and Chairman of the SPAR Northern Guild, said: “Congratulations to Dara and the Randhawa family on hitting their targets and earning £100,000 of free stock.
“We recognise switching brand is a big decision for a retailer which is why this isn’t a gimmick, and we offer this to all retailers who join the SPAR family with James Hall & Co. Ltd.
“As well as our £100,000 incentive, we also offer retailers the chance to achieve up to an additional £5,000 of free stock if they successfully refer a friend.
“These opportunities provide additional motivation to retailers alongside the comprehensive benefits that joining the SPAR brand brings with it.”
James Hall & Co. Ltd is a fifth-generation family business which serves a network of independent SPAR retailers and company-owned SPAR stores across Northern England six days a week from its base at Bowland View in Preston.