Revealed: the top ‘shrinkflation’ food items in Australia

The Senate inquiry into supermarket power has helped unveil one of the biggest brand’s top five supermarket items in Australia hit by ‘shrinkflation’ — reduced in size but not in price.

The world’s largest packaged food manufacturer, Swiss giant Nestle, has lifted the lid on the biggest supermarket items its sells in Australia which have seen a reduction in their size but where prices have stayed the same — known as ‘shrinkflation’.

Nestle, as well as British multinational Unilever, whose supermarket brands include Rexona, Vaseline and Omo, have detailed for the first time the unprecedented cost pressures now hitting their businesses and how reducing pack sizes can often be a key lever to pull.

But, Swiss giant Nestle has gone one step further, supplying to the Greens-led Senate inquiry into the supermarkets a list of the items it sells into supermarket chains which have undergone the largest reduction in size through calendar 2023 and the corresponding change in price.

The list was led by its cereal brand Weeties, which saw a 27.1 per cent decrease in size but only a 14.4 per cent drop in price, while for its Uncle Tobys Plus Immunity cereal, the pack seize shrunk by 18.1 per cent with no change in price — providing a real world example of ‘shrinkflation’.

Its KitKat mini share pack product also had no change in its price but was hit with a 17.6 per cent thinning of its size, with Rolo chocolate down 15 per cent and Milo Duo cereal smaller by 12.1 per cent and both items not changing in price.

“In the context of an inflationary environment, we want our products to remain at an affordable price point within the context of a consumer’s total grocery budget, with the same quality ingredients and taste consumers prefer,” Nestle said in a letter to the Senate inquiry.

“As the cost of making our products has gone up, in some instances we have decided to reduce the size rather than increase the price or compromise on quality.”

Food and grocery manufacturers are increasingly relying on shrinkflation to get around the impact of inflationary pressures on their own businesses — ranging from higher energy and labour costs to more expensive warehouse rents and steeper freight charges — and feel unable to pass on these costs to shoppers.

Nestle’s Weeties cereal had the sharpest ‘shrinkflation’. Picture: Norm Oorloff

Many consumers do notice package sizes getting smaller as they fill their baskets or trolleys, but it is not beholden on the grocery supplier or retailer to alert consumers a grocery item has been reduced in size.

Consumers are still paying the same price for the item, but their spending power is eroded given they are getting less goods for the same price.

The Senate inquiry into supermarkets’ final report released this week recommended improvements to the monitoring and disclosure of unit pricing for food and grocery items on supermarket shelves to help shoppers become more aware of shrinkflation tactics.

“Unit pricing is an effective tool to help consumers identify and understand when stores or producers use ‘shrinkflation’ tactics, where the price of an item is kept the same but the item itself is made smaller — effectively making it more expensive by weight or size,’’ the inquiry report said.

“To protect and enhance unit pricing, the committee supports amendments and improvements to the Unit Pricing Code. The Government should introduce a mandatory information standard for supermarkets that ensures their pricing is clear, and consistent with consumer expectations. This mandatory standard should include a requirement to prominently display a change in size and price of a product, along with any corresponding change in unit price.”

The Senate report noted shrinkflation is done “covertly” and has pushed for advertising on supermarket shelves when a pack size is changed.

“It is our view that supermarkets should begin voluntarily advertising shrinkflation so that pressure is placed on multinational producers who are ultimately responsible for the reduction in product size, and the increase in product cost. An example of this would be a pink ticket displayed for 60 to 90 days when packaging size has changed.”

In response to the submission and the issue of shrinkflation, a spokeswoman for Nestle told The Australian the decision to change package sizes came as cost of living pressures hit shoppers, but could also happen for other reasons, such as changes to manufacturing processes or for nutritional needs.

“We know that right now our consumers’ biggest concern is increasing prices, but it’s important to know that there’s a few reasons pack sizes can change. We might be simplifying our factory operations to keep costs down, finding ways to avoid food waste both in the factory and with the shopper, changing the pack size to manage increasing costs — or a combination of all of them. For some products, like confectionery, product sizes may also be reduced to meet nutritional guidelines.

“We know no one loves a price increase, and even more so now when so many people are doing it tough. So when our costs are increasing too, and we’ve done everything we can to keep the cost of making a product down, we think hard about how we’re going to keep the price as low as we can for the consumer, and competitive with other products.

“In some instances, to do this without compromising the taste and quality consumers want, we may reduce the size of the pack while keeping the price the same. For someone who is shopping to a fixed weekly budget, this can help keep the product affordable.”

Unilever, whose personal healthcare and food brands also include Lynx body spray, Dove soap, Magnum ice cream and cleaning brands Surf and Omo, said in its letter to the Senate inquiry cost of living pressures had triggered a shift in consumer behaviour.

“We operate in competitive categories, and our products face competition from other brands and supermarket own-label alternatives. We work closely with all our retail customers to ensure that we have a range of products on offer at different sizes which suit shoppers with different household incomes,” wrote Nick Bangs, head of Unilever in Australia and New Zealand.

“Often, hitting a particular price point is important to consumers, so it can make sense in some cases to reduce a pack size rather than prices going up. Pack size is one of the levers we can pull but it is not the only one.”

In its response to the Senate inquiry food manufacturer Kraft Heinz said its range of jams and marmalades had the largest decrease in package size over 2023, with some reduction in price, but it did not disclose if the fall in price was at the same rate as the fall in size.