Global: Brand managers under fire as Shrinkflation becomes widespread
By Zion Rufus
From Nigeria to Pakistan, companies are grappling with soaring costs that are being passed on to customers through manipulated and reduced content and sizes of packaged goods such as cereals, beef rolls, beverages, noodles, pasta, powdered products, and more.
In the face of global inflation, economic disruptions, and a sustained increase in the general price level of goods, numerous well-known brands, especially in the FMCG sector, have resorted to shrinkflation; and this practice of downsizing products has put brands and brands managers under scrutiny, leading to concerns about consumer trust and value erosion.
Urging brand managers to strive for better practices and ethical standards in a comment on the issue of shrinkflation, Professor Mike Kitz from the University of Notre Dame stated that he adamantly refused to engage in shrinkflation practices for any brand he worked with. He believed that such tactics were dishonest. Although the labeling may claim otherwise, Kitz suspects that many corporate individuals deliberately aimed to prevent consumers from noticing the changes. He pointed out in his LinkedIn comment that the decline in consumer trust, as indicated by research, clearly demonstrates that consumers perceive shrinkflation as an act of dishonesty.
According to EY Parthenon’s latest Future Consumer Index, the challenging economic environment has led consumers to lose trust in consumer product companies and retailers due to ongoing price increases and product shortages. Globally, consumers are now focused on value, with 73% of them noticing a decrease in pack sizes while the prices remain the same. Additionally, 64% of consumers believe that private label products are just as good as branded ones.
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. They are publicly exposing the worst offenders on social media, helping others make informed purchasing decisions. 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.
Known as a “contents reduction strategy” in marketing, shrinkflation has emerged as the new global endemic, as professionals around the world recognize its impact on local markets. Zafar Masud, President & CEO of the Bank of Punjab, shared his experience in Pakistan, stating that the effective inflation is much higher than what is officially reported. Similarly, Shizzan Nawab, a brand consultant, highlighted the challenges faced by FMCG companies in balancing rising costs and customer loyalty. He urged consumers to stay informed, make conscious purchasing decisions, and support transparent and value-oriented brands.
Shrinkflation is a marketing tactic employed by companies when production costs increase. 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.
Consumers like Davina Omisore, an audiologist who recently shared her viewpoint in a LinkedIn comment have noticed the subtle reduction in product sizes, even down to the coffee cups used at work. Omisore also expressed concern that even if inflation decreases, people will still be paying the same or higher prices for smaller quantities.
On his part, Khawaja Muhammad Mursaleen, a real estate advisor, acknowledged that companies in Pakistan have already decreased sizes and raised prices, with the full burden falling on consumers.
Osama Ishtiaq Minhas, a strategy manager, has also observed shrinkflation when purchasing diapers for his daughter. Despite these tactics, he emphasizes 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.
Diarmuid MacDonald, an SEO expert, confirms that shrinkflation has become a sad reality. In a LinkedIn comment he said: “Shrinkflation is real – in case you ever had any doubts. In fact, this is worse than that – this may be mis-labeling (trading standards take note). I bought some bottles of ginger ale and tonic from a well-known supermarket and could see they were all not filled up to the neck. There is meant to be 1 litre in the bottle – so I put 1 litre of water into a spare bottle and compared the two. You can see the difference. Multiply that by all the bottles of drink being produced! Maybe not a big deal – but it all adds up.”
George Gabriel, a social innovator and strategist said “In my view this opens up massive opportunities for what I refer to as cooperativism. A middle way that offers better quality at lower prices based on the cooperative efforts of the key stakeholders (employees and consumers). Through platform coops (tech-based & decentralized, we have a real chance of creating new economic models that put the power where it belongs.”
Identifying shrinkflation can be challenging for consumers because manufacturers employ various methods to reduce package sizes while keeping prices unchanged. For example, they may add air to the package or increase the divot in the bottom of a jar. Sometimes, product size changes are accompanied by packaging color, material, or design modifications to create the perception of added value without consumers noticing the reduction in quantity. It’s important to note that product size changes are not uniform across brands, sizes, or flavors.
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