Understand Shrinkflation and Effective Marketing Strategies

Shrinkflation isn’t a new phenomenon. As a term, it gained significant traction in the late 2010s and early 2020s, particularly during periods of economic uncertainty and rising inflation. However, what’s different today is the attention shrinkflation as a tactic continues to gain.

As of August 2024, the hashtag #shrinkflation has garnered 86 million views on TikTok, as users take to their screens to expose the brands that use the tactic and share tips on getting the best value when shopping. This heightened consumer awareness is driving a shift towards more thoughtful and savvier shopping habits.

Join Mintel as we explore how brands can navigate the complexities of shrinkflation. We’ll deep dive into innovative strategies in the Food and Beauty industries across the globe to help you refine your messaging to align with consumers’ evolving needs and preferences. Learn how to strengthen your brand’s resilience in the face of rising costs and stay ahead in a challenging market landscape.

Shrinkflation, a clever portmanteau of “shrink” and “inflation”, is a subtle yet significant strategy where companies reduce the size or quantity of a product while keeping the price the same, or even make price points slightly higher. This form of price inflation often goes unnoticed by consumers if the changes happen gradually over time. It’s a tactic increasingly common in the Food and Beauty industries, enabling brands to effectively raise prices without making it too obvious to the average consumer.

Shrinkflation may not break any specific laws, but it does tread a fine line when it comes to ethics. While there are no legal requirements to disclose subtle size reductions, failing to clearly inform consumers can easily be viewed as misleading and a deceptive form of marketing.

However, in industries like Food and Beauty, where inflationary pressures are squeezing margins, shrinkflation is increasingly seen as a necessary strategy. The key to maintaining consumer trust lies in transparency – if brands are honest about these changes, they can navigate the challenges of rising costs, while maintaining consumer trust.

In the UK, surging inflation is driving consumers to change their shopping habits and adopt more value-seeking behaviours, such as switching to budget brands. Over three in ten UK consumers expect to shop more at discount retailers, with many also expecting to buy more own-label packaged goods. While some food brands are passing on costs to consumers, others are turning to shrinkflation, resizing their products to maintain price points despite ongoing inflationary pressures.

As highlighted in our UK Food Packaging Report, the rise in packaging material costs is further prompting manufacturers to explore lighter weights and reduced packaging, which will reshape the demands in the packaging industry. Packaging companies will now need to be more agile and collaborative to help brands sustainably mitigate costs.

Mintel has observed that several chocolate brands have employed shrinkflation to offset declining volume sales. For instance, in the everyday chocolate category—which includes single-serve and multi-serve formats like bars, blocks, and bags—the average volume per unit sold decreased from 101.5g to 98g between 2021 and 2024, reflecting a 3.5% reduction in size. However, some products have been downsized even more significantly to absorb cost increases without raising prices.

Notable examples of shrinkflation have made headlines, such as Galaxy bars shrinking by 10%, Cadbury Dairy Milk reducing the size of sharing bags and Quality Street tubs becoming smaller. Many consumers display positive reactions to the shrinking of their chocolate; half of UK consumers say they would rather see their favourite chocolate bars get smaller than have the price go up.

In Canada, a similar story emerges. Over four in ten food and drink consumers are open to smaller portions if it helps keep prices under control. This suggests that brands can use shrinkflation as a viable alternative to raising prices. To engage consumers in the face of shrinkflation, brands can focus on transparent communication and value-driven strategies. By communicating openly, such as through social media challenges, or packaging labels, brands can build trust and maintain customer loyalty.

To further mitigate the negative impact of shrinkflation, some food brands are emphasising the quality of their ingredients. This approach resonates with more than half of UK consumers, who would rather have a small amount of premium chocolate rather than a larger amount of regular chocolate. Strategies like this not only justify the reduced size but also enhance the value of the product.

Meanwhile, as of July 2024, the French government has introduced a decree requiring retailers to inform consumers of shrinkflation. This change speaks to the growing distrust between brands and consumers when it comes to product prices. Although inflation in France has eased over 2024, the cumulative effect of price increases over the past two years means that many consumers are still feeling the pinch, with 71% reporting they have been affected by increases in food and drink prices (client access only). While consumers may accept smaller pack sizes as a cost-cutting measure, they expect brands to be clear and transparent about these changes. To maintain trust, it is crucial that brands communicate openly about adjustments in product sizes.

Shrinkflation as a tactic has been a long-standing strategy in the beauty industry. However, the increased use of social media platforms like TikTok and Instagram are placing this practice under scrutiny as consumers are empowered with knowledge and are exposing the subtle reductions in product size or price increases that might have otherwise gone unnoticed. This heightened awareness means that brands risk being seen as opportunistic, undermining trust and supporting a narrative that businesses are prioritising profit over consumer welfare.

To help moderate the negative impact of shrinkflation, brands in the beauty industry are innovating with strategies that maintain consumer confidence and engagement. One effective approach is offering sampling options alongside unaltered full-sized products. This strategy not only reassures consumers that they aren’t being tricked into paying more for less but also aligns with their desire for value. Minis, samples, and testers are particularly appealing to beauty shoppers, especially Generation Z, who appreciate the opportunity to explore products without generating waste. By providing these trial options, brands can foster loyalty while minimising the perception of shrinkflation as a purely profit-driven move.

Another powerful strategy is the introduction of refillable packaging in the beauty industry, which resonates with budget-conscious consumers and those committed to sustainability. Over three in five US makeup users show interest in cosmetics in refillable packaging. Similarly, 66% of German cosmetic consumers believe all grooming products should be refillable, with almost three-quarters having used or wanting to try refillable options. This approach not only appeals to clean and eco-conscious beauty shoppers but also offers a cost-effective solution that enhances brand loyalty. By emphasising the dual benefits of reducing packaging waste and saving money, brands can position themselves as both socially responsible and consumer-friendly, effectively countering any negative perceptions associated with shrinkflation.

As consumers are forced to reevaluate their purchasing priorities during times of financial uncertainty, the pressure is on beauty brands to prove their worth and genuine support to their audience. One way of doing this is to build trust and maintain loyalty with transparent price strategies. A standout example of this initiative is the US skincare brand Cocokind. In a bold move, Cocokind took to Instagram to share a visual breakdown of its product costs, detailing salaries, corporate costs, shopping, marketing, and reinvestments. Cocokind’s initiative includes consumers in the brand’s journey, making them feel valued and informed about the reasons behind pricing decisions, therefore, making them more likely to accept increases.

While it can be a viable strategy, shrinkflation presents several challenges that brands need to consider:

Below, we summarise the top four strategies brands can implement to help maintain consumers’ trust when using shrinkflation.

While shrinkflation may be an unavoidable response to economic pressures, how brands navigate this practice can significantly impact their relationship with consumers. As consumers become more informed and sceptical, it is essential for brands to prioritise transparent communication, demonstrate empathy, and highlight the additional value they provide. By explaining the reasons behind shrinkflation and emphasising their commitment to quality and sustainability, brands can transform this challenge into an opportunity to strengthen consumer trust and loyalty, even in tough economic times.

For brands looking to get strategic insight into their global sustainability messaging, take a look at Mintel’s new Consumer Sustainability Study 2024-25.

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