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  • Diversitech Team

What is Shrinkflation?

Updated: Jul 18, 2023

Shrinkflation may sound like a dirty word, but this is something that both Pringles and Cadburys implemented in 2022 to maximize their profitability. In a nutshell, shrinkflation is defined as "a reduction in the size or quantity of a product while the price remains the same". This strategy is used to help companies keep prices steady despite inflationary pressures from their suppliers. Without any change in the sticker price of the product. Often, consumers are unaware of the reduced size or weight of the product. Shrinkflation can be implemented in a number of ways. For example, a company might reduce the size of its products (think smaller bags of chips or candy bars) while keeping the price the same. Or, it might reduce the quantity of product in a package while maintaining the same price (this is often done with food items like coffee or cereal, where the consumer may not notice a difference in the overall weight or volume). While shrinkflation might seem like a sneaky way for companies to boost their profits, it’s important to remember that producers are always required to indicate the weight, volume, or quantity of their products on packaging labels. By reducing the size or weight of the product while maintaining the same price, manufacturers have effectively raised the per unit price of the product. Due to clever marketing or packaging, consumers may not notice this change and may end up paying more without realizing that they are getting less for their money. Even though shrinkflation might seem like a good way for producers to save money, it can actually be bad for businesses in the long run. This is because people might start to notice that they are getting less product over time. They might become angry and stop buying the product altogether. In the end, shrinkflation can hurt a producer's bottom line more than if they had just raised prices or had just been upfront about product changes.

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