Shrinkflation – A Good Strategy? 

As brands battle with high inflation and consumers are caught in the cost of living crisis, can shrinkflation be the solution?
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As costs continue to rise and inflation soars, consumers are getting squeezed at both ends. So let’s take a look at the role of shrinkflation.

One solution for brands is rather than increase prices, which may not sit well with consumers, is to reduce the quantity of the product at the same price. 

It’s called shrinkflation and is often perceived as a sneaky way for brands to increase margins.

A good illustration of this comes from Burger King in South Africa where they position their brand against shrinkflation. 

However, in these times maybe there are certain instances where shrinkflation may create a win-win for both consumers and brands. 

Let’s explore these. 

1. Packaging 

Packaging is one area where brands can really win in. For instance, Amazon is notorious for packaging small items in big boxes etc. 

This is one area where being more economical can be a big cost save with literally not compromise to the customer.

In addition, it’s can have a huge positive environmental impact.

For instance, Polish retailer, Biedronka Is prioritising reducing the plastic in its packaging.

It is also improving bulk packaging and deliveries.

This has led to a 600 tonne reduction in plastics in one year. 

Another really good example comes from Nescafé whose Super Bowl ad encourages users to re-use their coffee containers for other purposes.

They recently launched this new creative in light of this, where they inspired their customers about how else their jars can be used. 

Another example comes from The Body Shop with the roll out of their refill products.

It created a huge buzz in their Oxford Street store which has led them to roll out the concept nationwide. 

So brands can really beat inflationary pricing in this way, whilst not actually compromising or downsizing their products. 

2. Excess consumption 

One can argue that in areas where too much of something or where there advisory limits, shrinkflation can actually be a good thing. 

From unhealthy food through to smoking, actually helping to reduce consumption by limiting the amount on offer is in the customer interest. 

For instance, reducing the volumes of high sugar drinks like Coca-Cola in places like India have a dual benefit.

Firstly, people drink less of it and secondly, the lower volume actually fits the economic wallet of consumers better. 

Coca Cola has been able to redefine consumption in this market by offering smaller quantities of their drinks at lower price points.

Interestingly, this has led to them being able to tap into new emerging segments of the market. So not only is it more economical for the consumer, Coca Cola have actually gained more market share in a “blue ocean” ie uncontested market. 

3. Average food waste 

On average, consumers waste as much as 30% of the food we buy each week. It comes with huge economic, social and environmental consequences. 

I would say this is perhaps the greatest rationale in favour of shrinkflation. The fact that we waste a huge proportion of what we buy in any case. 

So if brands can rightsize their portions in line with actual consumption patterns this would be hugely beneficial. 

4. Substituting ingredients 

Another way to achieve shrinkflation is to substitute ingredients. Now ofcourse if this comes at the compromise of quality it will not be seen in a favourable light. 

However, if seen as a way to reduce some of the more unhealthy ingredients such as high levels of sugar, it would be a welcomed change. In fact, this aligns with the new UK regulation against promoting high in fat, sugar and salt foods (HFSS)

By reducing the levels of these in foods, brands could actually be doing themselves and their consumers a favour.

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