What Is Shrinkflation? 5 Shrinkflation Examples in 2022.

  • As inflation rears its ugly head, some companies are opting to reduce the size of their products rather than increase prices.
  • Companies across industries and countries are downsizing their products as a cost-cutting measure.
  • Firms like Domino's (DPZ) and PepsiCo (PEP) are prime examples of companies which have opted for shrinkflation rather than raising prices.
A concept image showing the phrase "Shrinkflation"
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As inflation continues to eat away at companies’ bottom lines, businesses are rapidly choosing an alternative to raising prices: shrinkflation. Shrinkflation is the act of downsizing the size or quality of a good while holding its sticker price constant. It’s a sort of new-age alternative to raising prices, one that not everyone agrees with.

Right now, companies are in a tough spot. Many must raise prices on their products or face substantial losses. Companies like CVS Health (NYSE:CVS), Kroger (NYSE:KR) and Costco (NASDAQ:COST) have chosen to raise prices on their goods, much to the chagrin of their customers. On the other hand, companies like Target (NYSE:TGT) have opted to hold their prices relatively constant — or even lower them —  as a way to appeal to consumers at the expense of its profit margins.

Shrinkflation is now emerging as an alternate path. A wide variety of companies has opted to reduce the sizes of their products in surprising and creative ways.

In fact, the r/Shrinkflation subreddit has seen renewed interest of late due to sometimes-comedic product downsizings.

5 Shrinkflation Examples in 2022

  1. Nestle (OTCMKTS:NSRGY) recently came under fire for reducing the size of its Cadbury Dairy Milk sharing bar from 200 grams to 180 grams.
  2. Citing the increasing cost of chicken, Domino’s (NYSE:DPZ) announced in January it is now including fewer chicken wings in its carry-out servings. $7.99 will now get you eight pieces, down from the previous 10-piece serving.
  3. Tillamook recently reduced the contents of its ice cream cartons to 48 ounces from 56 ounces.
  4. PepsiCo (NASDAQ:PEP) recently passed a number of shrinkflation initiatives across its host of brands. Bags of Party Size Frito Scoops went from 18 ounces to 15.5 ounces this year. Meanwhile, the company has long been in the process of phasing out its 32-ounce Gatorade bottles, instead opting for 28-ounce containers.
  5. Shrinkflation is even hitting tissues. Within the past few months Kleenex has lowered the number of tissues in its small packaging from 65 to 60.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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