Shrinkflation

From CBC:

“Marketplace investigates shrinkflation and reveals the sneaky ways companies cut costs, but not prices”

With prices for all kinds of consumer goods surging, CBC Marketplace looked at some ways consumers are paying more for less — and may not even know it. Experts tell Marketplace that greater transparency is needed to help consumers identify the ways in which companies may subtly reduce the quality and quantity of their products while charging consumers the same amount or more. Shrinkflation is a tactic that companies use to subtly reduce the size or weight of a product to save money without increasing the price. A less commonly known form of shrinkflation is where a company swaps out ingredients for cheaper alternatives, or adds water while decreasing other ingredients.

Governments could intervene, says economist and writer Armine Yalnizyan, especially when it comes to monitoring pricing in sectors with little competition like grocery stores. "We really don't have something that works in the interest of consumers, even though we're a highly consumer-oriented society," Yalnizyan said. The Competition Bureau announced in October that it will be looking into competitiveness in the grocery sector and making suggestions to the government about how it can be improved based on its findings. Daniel Tsai, a business professor at Toronto Metropolitan University who runs a consumer rights website, says this market study is an "adequate first step." But he notes that the bureau will be limited in its study of the sector. It will not be able to study how costs on the manufacturer's end — such as gas, transportation and ingredients — impact prices at grocery stores, he says.

Marketplace tracks shrinkflation in action

(Experts say that when a product has been redesigned, it’s a red flag that shrinkflation may have occurred as well.)

Marketplace identified several items that underwent shrinkflation recently, and BetterCartAnalytics — a company that tracks grocery pricing — provided the price history of the products.  Betty Henry, a consumer in London, Ont., has been using E.D Smith's Pumpkin Pie Filling for 50 years to make pies for Thanksgiving. She says she noticed a difference in the filling as soon as she opened the can this year. The pie filling used to list vegetable oil as the third-largest share in the ingredient list.  In the new version of the product that Henry used this year, vegetable oil had been moved to sixth place. And taking its place at third? Water.  "It was more pumpkin soup than pie filling," Henry said of the added water. Henry says she thinks the move by E.D Smith was dishonest and that she won't be using the pie filling again. "I just found it a sneaky way to cut down on costs," she said. "I don't like paying for water. You can get it out of the tap, you don't need to buy it." The price of the pumpkin pie filling has increased by more than 50 per cent since January 2021. At that time, the pie filling was $3.99. In October 2022, it had gone up to $6.03 at Loblaws stores in Toronto. Both versions of the can were 540 millilitres.

It's one more way to help you save at the grocery store — so why isn't unit pricing mandatory?

(The Pearl Milling Company’s new bottle (left) has less product in it but the bottle is taller than the older version of the product with 750 millilitres (right))

Winland Foods recently bought E.D Smith, and its CEO, Eric Beringause, says that the change happened under the previous ownership and so he has no knowledge of the rationale. But he did respond to the concerns from customers like Betty Henry about the product. "I'm sorry to hear that they were disappointed in the product and I will personally look into it," Beringause said. The pie filling wasn't the only grocery item where Marketplace found the product had changed and the price increased shortly afterward. In September 2021, Pearl Milling Company Maple Syrup Lite contained 750 millilitres of product and cost $1.97 at Walmart stores across Toronto. The syrup was switched out for a newer version beginning that month. The product shrank to 710 millilitres and was kept at the same price the following month. But by November, the price went up to $2.54 and increased again to $2.67 in December. As of October 2022, Walmart charged $2.97 for the reduced version of the product. Tsai says this move from the Pearl Milling Company seems "unjustifiable." "That strikes me that big price increase, with the reduction in quantity and increase in price, seems to be disproportionate with actual inflation numbers," he said. Tsai says that in this inflationary environment, where consumers are concerned about rising prices, manufacturers and retailers need to be more transparent about price increases and why they are occurring. Pearl Milling Company, owned by PepsiCo Canada, did not respond to requests for comment.

(By keeping the package the same size and only reducing the net weight as Barilla did in the product above, consumers are less likely to notice the change.)

In another instance of shrinkflation Marketplace investigated, Barilla spaghetti weighed 454 grams and cost $1.97 at Walmarts across Toronto in September 2021. The pasta product was switched out for a newer version beginning that month.  The product shrank to 410 grams. And the price fluctuated slightly until it went up to $2.12 in July. The price remained at a higher level since the summer, and as of October 2022, Walmart charged $2.27 for the reduced version of the product. When factoring in both the reduced size of the product and the price increase, the cost of the item has gone up by over 25 per cent. "A lot of families rely on pasta and rice…. It feeds families and it's meant to be cheap. It's meant to be something that's affordable," Tsai said.  In a statement, Barilla said that last year it had to "slightly modify" the package size and price in response to "the continuing rise in costs for raw materials and logistics," and "while balancing the need to offer 4-5 servings in one box at a good value."

More transparency about product sizing changes required by law in Brazil

(The chocolate milk product to the right has ‘Novo Peso’ listed on the bottom of the label, which means ‘New Weight.’)

When companies shrink products in Canada, they are under no obligation to let consumers know about the change.  In Brazil, there are laws in place to inform consumers of changes to a product's weight. Companies must state how much was in the product before and after the change. And the information must remain on the label for six months. For example, Nestle's chocolate milk originally contained 200 millilitres of product but it was reduced to 180 millilitres. The company had to list these changes at the bottom of the label. The company also had to provide the percentage change, which was a 10 per cent reduction in size. Yalnizyan says that a regulation like that here could be a good way to track how prevalent the issue of shrinkflation is in Canada. "I think the idea is promising with respect to educating the public," Yalnizyan said, "and to identify what types of products are prone to shrinkflation."

^ I would rather a company be honest with us and say “Hey look, because of the higher costs of everything that goes into making this  - both the food and product ingredients – we have to change a little more.” I am more willing to continue buying the smaller version after that rather than the fake and cheaper product we were lied about. ^

https://www.cbc.ca/news/business/marketplace-shrinkflation-1.6654780