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Your chocolate gets smaller but pricier
Your chocolate gets smaller but pricier

Your chocolate gets smaller but pricier

RETAILER NEWS

bdlive.co.za - Jul 13th 2016, 15:59

CONSUMERS are getting less bang for their hard-earned bucks as manufacturers downsize their products to contain costs. Prices, however, have remained the same and, in some cases, increased. 

While waistlines all over SA may be taking a much-needed break, the ongoing trend is taking a significant bite out of consumer pockets.

The term shrinkflation describes the practice. While not an official economic descriptor, it is understood to be a rise in the general price of goods per unit weight or size, with a corresponding reduction in the weight or size of the product sold.

Investec economist Kamilla Kaplan said this usually took place when companies were feeling margin pressure.

Domestic factors steering the practice include rising operating costs, depressed consumer spend and a subdued outlook for the local economy.

"In a weak consumer environment, it is difficult to pass on price increases as you risk losing market share. So, companies will opt for cost rationalisation to alleviate some of the pressure on margins. It would seem this could include reducing the weight of the product and keeping the price constant. Basically, it speaks to weak economic conditions."

Few items have been spared from the effect of shrinkflation, from canned drinks and coffee, to sheets on a toilet roll and washing powder.

Viccy Baker from consumer website Retail Price Watch said the trend had been prevalent for a number of years.

"It is not against the law — although it is bad practice — to change the size of the product and keep the barcode, but the stores concerned will have been informed (by manufacturers) about this, as they have to update their records. One could say they are complicit in the size reductions, as they do not take it upon themselves to inform the customer," she said.

Data compiled by Retail Price Watch shows that all Nestle Aero products changed size from 100g slabs to 85g slabs in the early part of 2015. The average price of the peppermint Aero 100g slab in stores around the country in 2015 was R14.29. The average price of the 85g slab in 2015 was R14.52. In 2016, the average price was R15.81.

Cadbury’s milk chocolate bar recently changed from 40g to 37g, while Cadbury’s Top Deck reduced to 36g from 40g. In 2015, the average price of the 40g milk chocolate bar was R6.25. In June and July 2016, the average price of the 37g milk chocolate bar was R8.25 at stores around SA.

Even baby formula has been affected. Abbott’s Isomil 3 Lactose Free recently changed from 900g to 850g. The average price in the first five months of 2016 was R200.78 for the 900g formula, while the average price in stores was R201.93 in June and July 2016 for the 850g product. Dove Nourishing Oil Care Conditioner changed from 400ml to 350ml. The price of the 400ml bottle is about R66 around the country, while the average price of the 350ml bottle introduced in March this year is R68.15.

The cost of chocolate could yet still rise, while slab size declines after the price of cocoa, a major ingredient in chocolate making, hit 39-year highs just last week.

Harvests in West Africa, where about 70% of the world’s cocoa is grown, have been unusually small in 2016.From DFM Publishers (Pty) Ltd 

Read more about: retail | price watch | manufacturers | chocolate

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