Download PDF

From Shrinkflation to Junkflation…

We all know that as shoppers we THINK we pay a lot of attention to the products we buy, when in fact a lot gets by entirely unnoticed – we simply don’t have the mental capacity to scrutinize every purchase of a brand or category over and over. As such, we unconsciously tolerate a lot of changes to our favorite products before we consider switching to alternatives.

‘Shrinkflation’ in the past was mostly seen as profiteering by manufacturers who took the simple route to keeping profits up. As such consumers (or at least those of us who noticed or were alerted by the social media outrage) responded negatively to such initiatives. However, in the current climate our focus seems to have shifted almost singularly to prices and our tolerance towards for pack sizes shrinking seems to have altered.

In our recent survey we found that in the current climate, a significant number of consumers are showing tolerance towards pack shrinkage given the widely accepted impact of rising ingredients costs, energy costs and the cost of labor. In fact, 50% of all consumers stated that they would be happy to accept a small reduction in size if it meant keeping prices the same. We also found a relationship between age of consumer and their tolerance for changing pack sizes with younger consumers being significantly more open to such a strategy versus older consumers.

But, just as consumer opinion on shrinking products is shifting in favour of the manufacturer, we are about to be faced with a different change altogether. As reported recently by the Grocer, manufacturers are having to make more fundamental tweaks to their product formulations in order to keep price increases at a tolerable level. Such changes imply a reformulation in favour of potentially cheaper ingredients. Mars was recently reported to have quietly reformulated their Galaxy chocolate bar by altering the ratio of skimmed milk powder to cocoa butter. It is difficult to predict how such changes will impact shopper preferences, given the individualistic response consumers are likely to have on sensory and taste changes versus something as binary as price. But should this be a major concern for brands?  

The current climate is driving an unprecedented amount of promiscuity in the market – people are forgoing normal habits and taste preferences in favour of price points. In any switch scenario consumers understand that a change in taste, quality and ingredients is a certainty and something that many now see as a valid trade-off for ‘better’ prices. As such it seems that manufacturers could be justified in considering reformulation as a ‘lesser of two evils’ strategy, however it is not without significant risk and because of this, it would be wise not to implement it without ensuring that the reformulation to hold price, will in fact retain and attract a greater number of consumers than you will lose.

As they say, research (or look) before you leap

To subscribe to our monthly newsletter for more Food & Drink News and Insights, complete the subscription form here. Alternatively follow us on LinkedIn

Photo by Daniele Levis Pelusi on Unsplash

More Levercliff views