Are our groceries getting smaller? What is "shrinkflation"?

what is "shrinkflation"

Level: Advanced

vocabulary:

• Shrink (Verb)

  • Definition: To become smaller in size, amount, etc.

  • Example: .If you put your cashmere sweater in the dryer, it will shrink.

• Inflation (Noun)

  • Definition: An increase in the prices of goods and services.

  • Example: Because of inflation, everything is much more expensive now than when I was a child.

• Appeal (Verb)

  • Definition: To be attractive, interesting or desirable.

  • Example: Taking a month-long vacation to Tokyo sounds very appealing.

• Straightforward (Adjective)

  • Definition: (of a person) honest and direct.

  • Example: My boss is very straightforward, if he doesn't like something he tells me directly and honestly.

• Reverse (Verb)

  • Definition: To change something so that it is the opposite of what it was before.

  • Example: I put the car in reverse and backed out of the garage.

• Supply chain (Noun)

  • Definition: The series of processes and organizations involved in producing and transporting products to where they are used or purchased.

  • Example: Hitendra Chaturvedi, a professor of supply chain management.

Are our groceries getting smaller? What is "shrinkflation"?

Producers are decreasing (shrinking) product sizes, from toilet paper to yogurt and coffee, while keeping prices constant. This practice, known as "shrinkflation," is occurring globally.

For instance, in the US, a small box of Kleenex now contains 60 tissues, down from 65 a few months prior. In the UK, Nestle reduced its Nescafe Azera Americano coffee tins from 100 grams to 90 grams. In India, a bar of Vim soap has decreased from 155 grams to 135 grams.  

Shrinkflation is not a new phenomenon. However, it intensifies during periods of high inflation, as companies grapple with escalating costs for materials, packaging, labor, and transportation.

Global consumer price inflation reached an estimated 7% in May, a trend projected to continue until September, according to S&P Global.

Edgar Dworsky, who documents shrinkflation on his Consumer World website, suggests that shrinkflation is appealing to manufacturers because consumers are more likely to notice price hikes than subtle changes in weight or package details.  

Companies also employ tactics to divert attention from size reductions, such as introducing vibrant new labels on smaller packages.

Some companies are straightforward about these changes. In Japan, snack company Calbee Inc. announced 10% weight reductions—and 10% price increases—for many of its products, attributing the decision to a sharp rise in material costs.  

In India, "down-switching," another term for shrinkflation, is mainly used in rural areas, where residents have less money, according to Byas Anand, an employee of Dabur India, a consumer care and food business. In urban areas, companies simply increase prices because the people there can afford a slight price change.

The trend can sometimes reverse. As inflation subsides, producers may lower prices due to competition. However, Dworsky notes that once a product's size is reduced, it often remains so, and "upsizing" is infrequent.

Hitendra Chaturvedi, a professor of supply chain management at Arizona State University's WP Carey School of Business, acknowledges that many companies face labor shortages and increased material costs. However, he also points out that some companies are experiencing significant profit increases, which he finds concerning

Reflective Questions:

1. Have you noticed any products that are smaller now than they used to be?

2. Have you noticed any increases in the prices of products in your country?

3. Would you prefer products to get smaller or to pay a higher price for the same sized product?