Shrinkflation
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We all know about inflation, but what about Shrinkflation? According to Investopedia, Shrinkflation is “the practice of reducing the size of a product while maintaining its sticker price. Raising the price per given amount is a strategy employed by companies, mainly in the food and beverage industries, to stealthily boost profit margins or maintain them in the face of rising input costs.”
In other words, you get less for the same price. To boost profit margins, many companies in the food and beverage industries hope consumers don’t notice the smaller amount offered at the same price. Consumers notice price increases more than quantity decreases.
This is a common strategy for offsetting higher production costs and maintaining market share. Production costs can be raises in raw materials or labor, among other factors. To keep customers from switching to other brands because of price increases, many companies employ Shrinkflation.
If consumers notice that a brand is employing Shrinkflation it can have a detrimental effect on consumer sentiment. Since the Covid 19 Pandemic this has been a familiar tactic as companies are trying to offset higher production and shipping costs. Since before March 2020, consumers are paying up to 10 percent more at the grocery store, CBSNews.com reported in June 2021.
“This is partly due to an imbalance in supply and demand, with Oxford Economics pointing to the reopening of the U.S. economy as putting new pressure on retailers, restaurants, and other businesses. For instance, restaurants — which shut off purchases of meat and other supplies last year when the pandemic shuttered the economy — are now ramping up purchase orders to meet the resurgent demand from consumers.”
With rising labor, production, and shipping costs projected to continue, Shrinkflation is surely here to stay. Be sure to check quantity amounts and not just price and brand when shopping to see if your favorite brands are employing this strategy.
Sources: https://www.investopedia.com/terms/s/shrinkflation.asp
https://www.cbsnews.com/news/grocery-prices-rise-supermarkets/ -
To be honest I thought this was gonna go into a whole different direction with the title…
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To be honest I thought this was gonna go into a whole different direction with the title…
HerbcoFood I assume you may be referring to the infamous Seinfeld episode!
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JohnG5 It’s Monday…I am still not firing on all cylinders quite yet.
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I’ve noticed that most bacon packages are no longer 16 oz. A lot are 12 or 14! Shrinkflation.
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My local coffee roaster just switched from 12oz to 10.5oz bags. And here I am still getting over the change from 16oz to 12oz.
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This post is deleted!
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processhead I see you deleted your comment, I am hoping that is just because you are planning on expanding on that? It is an interesting point that I don’t think anyone would consider that variable cost ratio.
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JohnG5 hahahaha!!!
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We all know about inflation, but what about Shrinkflation? According to Investopedia, Shrinkflation is “the practice of reducing the size of a product while maintaining its sticker price. Raising the price per given amount is a strategy employed by companies, mainly in the food and beverage industries, to stealthily boost profit margins or maintain them in the face of rising input costs.”
In other words, you get less for the same price. To boost profit margins, many companies in the food and beverage industries hope consumers don’t notice the smaller amount offered at the same price. Consumers notice price increases more than quantity decreases.
This is a common strategy for offsetting higher production costs and maintaining market share. Production costs can be raises in raw materials or labor, among other factors. To keep customers from switching to other brands because of price increases, many companies employ Shrinkflation.
If consumers notice that a brand is employing Shrinkflation it can have a detrimental effect on consumer sentiment. Since the Covid 19 Pandemic this has been a familiar tactic as companies are trying to offset higher production and shipping costs. Since before March 2020, consumers are paying up to 10 percent more at the grocery store, CBSNews.com reported in June 2021.
“This is partly due to an imbalance in supply and demand, with Oxford Economics pointing to the reopening of the U.S. economy as putting new pressure on retailers, restaurants, and other businesses. For instance, restaurants — which shut off purchases of meat and other supplies last year when the pandemic shuttered the economy — are now ramping up purchase orders to meet the resurgent demand from consumers.”
With rising labor, production, and shipping costs projected to continue, Shrinkflation is surely here to stay. Be sure to check quantity amounts and not just price and brand when shopping to see if your favorite brands are employing this strategy.
Sources: https://www.investopedia.com/terms/s/shrinkflation.asp
https://www.cbsnews.com/news/grocery-prices-rise-supermarkets/JohnG5 The hotdogs I buy used to be two pounds now they are 24oz for same price, package looks the same.
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I saw this happen to my chicken feed 2016 thru 2019 they went from 50# to 40# bags because they were easier to handle by the hobby farm trend and at that time they adjusted their price, but 2019/2020 they went from 40# to 35# and price did not.
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My local coffee roaster just switched from 12oz to 10.5oz bags. And here I am still getting over the change from 16oz to 12oz.
Jamieson22 said in Shrinkflation:
My local coffee roaster just switched from 12oz to 10.5oz bags. And here I am still getting over the change from 16oz to 12oz.
What they don’t understand is people like me who wouldn’t even buy the smaller bags. I would be far more interested in the 2-5lb range.
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We all know about inflation, but what about Shrinkflation? According to Investopedia, Shrinkflation is “the practice of reducing the size of a product while maintaining its sticker price. Raising the price per given amount is a strategy employed by companies, mainly in the food and beverage industries, to stealthily boost profit margins or maintain them in the face of rising input costs.”
In other words, you get less for the same price. To boost profit margins, many companies in the food and beverage industries hope consumers don’t notice the smaller amount offered at the same price. Consumers notice price increases more than quantity decreases.
This is a common strategy for offsetting higher production costs and maintaining market share. Production costs can be raises in raw materials or labor, among other factors. To keep customers from switching to other brands because of price increases, many companies employ Shrinkflation.
If consumers notice that a brand is employing Shrinkflation it can have a detrimental effect on consumer sentiment. Since the Covid 19 Pandemic this has been a familiar tactic as companies are trying to offset higher production and shipping costs. Since before March 2020, consumers are paying up to 10 percent more at the grocery store, CBSNews.com reported in June 2021.
“This is partly due to an imbalance in supply and demand, with Oxford Economics pointing to the reopening of the U.S. economy as putting new pressure on retailers, restaurants, and other businesses. For instance, restaurants — which shut off purchases of meat and other supplies last year when the pandemic shuttered the economy — are now ramping up purchase orders to meet the resurgent demand from consumers.”
With rising labor, production, and shipping costs projected to continue, Shrinkflation is surely here to stay. Be sure to check quantity amounts and not just price and brand when shopping to see if your favorite brands are employing this strategy.
Sources: https://www.investopedia.com/terms/s/shrinkflation.asp
https://www.cbsnews.com/news/grocery-prices-rise-supermarkets/JohnG5 fast food dose this also
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I’ve noticed that most bacon packages are no longer 16 oz. A lot are 12 or 14! Shrinkflation.
ND Mike Its been happening everywhere now for quite some time, sneaky son of a guns!
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I’ve noticed that most bacon packages are no longer 16 oz. A lot are 12 or 14! Shrinkflation.
ND Mike Mine just went up in price, the weight is the same, it’s about $1.50 more for a 12oz package that I used to like to get on sale.
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ND Mike Mine just went up in price, the weight is the same, it’s about $1.50 more for a 12oz package that I used to like to get on sale.
HerbcoFood yeah its crazy!
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ND Mike Its been happening everywhere now for quite some time, sneaky son of a guns!
calldoctoday i agree. Pretty dirty actually!
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The ice cream people did it a few years ago. They switched from 1/2 gallon to 1.5 quarts.
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