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Shrinkflation - Post-Brexit Downsizing

Geoff Riley

20th November 2016

I was chatting to a senior executive of one of the world's biggest chocolate manufacturers a few days ago and his view was that the makers of Toblerone had made a crazy call in cutting out some of the chocolate spears in their product. His view was that shrinkflation - lowering the product weight/size whilst keeping the price constant would have made more commercial sense.

Shrinkflation is an option for businesses who are reluctant to raise prices but whose profits are getting squeezed by significant increases in the costs of their raw materials. The world price of chocolate has risen sharply over the last twelve months and UK food processors have been hit hard by the depreciation in the value of sterling which has lifted input inflation from more expensive imports.

According to the Independent newspaper, over the last five years, a six-pack of Creme Eggs has become five, Mars and Snickers have both shrunk in size and a one kilogram tin of Quality Street lost 180g.

For some smaller independent chocolate producers, the shrinkflation happening with transnational businesses has become a seasonal marketing opportunity!

One of the upsides of shrinkflation is that although product weight is lowered, consumers are spared a higher price, thus leaving the rate of inflation unaffected. And smaller portions might also help in the battle against growing obesity!

All About Toblerone - History & How It's Made

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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