Soaring Cost Forces Brands To Downsize Product, Practice Shrinkflation

Manufacturers and brand managers in the fast moving consumer goods (FMCG) sector have embarked on product downsizing and shrinkflation practices to modify both refill and sachet packs of consumer brands into reduced packages and sizes.

This, it was learnt, was in a move to offset rising cost to survive the current headwinds of high inflationary and challenging environment while keeping prices unchanged.

Indeed, consumers have noticed the product modification accompanied by packaging colour, and design modifications to create the perception of added value without consumers noticing the reduction in quantity.

Shrinkflation can be challenging for consumers because manufacturers employ various methods to reduce package sizes while keeping prices unchanged. This include; adding air to the refill packs or increase the divot in the bottom of a jar.

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Globally, consumers are now facing content reduction of quantity packs by FMCG brands and manufacturers of products through manipulated and reduced content and sizes of packaged goods such as cereals, beef rolls, beverages, noodles, pasta, powdered products, and more.

73 per cent of products are noticeable with the content reduction strategy of shrinkflation in decreased packs and sizes while the prices remain the same. Additionally, 64% of consumers believe that private label products are just as good as branded ones.

In the face of global inflation, economic disruptions, and a sustained increase in the general price level of goods, notable brands in the FMCG sector have resorted to product downsizing which has put consumer managers under scrutiny, hence, leading to concerns about breaking consumers trust.

Meanwhile, FMCG companies are grappling with soaring costs that are being passed on to customers through manipulated and reduced content and sizes while urging brand managers and manufacturers to strive for better practices to improve consumers satisfaction than engaging in shrinkflation practices.

Experts believe that such tactics were deliberately dishonest and aimed at content reduction strategy to prevent consumers from achieving maximum utility on the product .

EY Parthenon’s latest Future Consumer Index, noted that, the challenging economic environment has led consumers to lose trust in consumer product companies and retailers due to ongoing price increases and product shortages.

Although “shrinkflation” is not a new tactic, it is now receiving widespread attention. As brands reduce product sizes to offset rising costs, shoppers are taking notice.

In response, some brands are proactively publicizing product changes to get ahead of criticism, while others remain silent, hoping that smaller and lighter product sizes go unnoticed as long as prices remain stable.

Speaking, Marketer of FMCG brands who spoke on condition of anonymity said content reduction strategy and shrinkflation has emerged as the new global endemic while recognizing its impact on local markets, stating that, the effective inflation is much higher than what is officially reported.

Similarly, director and perception manager at reignite, CMC connect, Mr. Tola Odusote highlighted the challenges faced by FMCG companies in balancing rising costs and customer loyalty while he urged consumers to stay informed, make conscious purchasing decisions, and support transparent and value-oriented brands.

He averred that shrinkflation practices is a marketing tactic employed by companies when production costs increase, adding that, this ensure that they typically cut costs by either reducing the quantity or quality of a product while keeping the price constant or by maintaining the quality and quantity while inflating the price.

However, consumers are primarily focused on the price of goods and less aware of small changes in product size, volume, and quality.

Davina Omisore, an audiologist who recently shared her viewpoint noticed the subtle reduction in product sizes. She also expressed concern that even if inflation decreases, people will still be paying the same or higher prices for smaller quantities.

Chief ideas, Lilvera Group, Mr. Buchi Johnson said, despite these tactics, the importance of consumer awareness, evaluating products based on true value rather than just the price tag, and transparent communication from businesses to maintain trust, cannot be over-emphasised.