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Shrinkflation

Shrinkflation is in news from past few months especially in Europe and USA and now also in India.





Shrinkflation is a practice of reducing the quantity or size of a product and selling it with the same price or slight increase in price.It can also called as Package downsizing.It is a strategy of employed by company to increase or maintain profit margins when the cost of Input are rising.


Shrinkflation is now common practice among producers but it can lead to customer frustration and deteriorating consumer sentiment regarding the producers brand.

What can be the causes of Shrinkflation?

Higher production cost

Rising in production cost of raw materials,labour,energy commodities diminish the profit margin of manufacturer.Thus,reducing the size and quantity improves the producers profit margin and a average consumer will not notice a small reduction in quantity and for this sales voume will not be affected.

Tough Market competition

Because of Available Substitutes if the product price increases ,the customer base will shift towards the substitute brand.Therefore,to maintain the customer base and profit margin this practice is followed.


Practical Examples:-

1) A 10Rupee bar of the Company’s popular Vim soap weighs 135 grams compared to 155gm few months ago.

2) A crunchy and Salty snack called Aloo bhujia by Haldirams weigh now 42 gm instead of 55gm few months back.

3) A small bottle of Thumbs up and coca-cola have also been reduced from 250ml to 200ml now.

4) Nestle maggi noodles size have reduced from 100 gms to 70gms and price rose from 10 to 12.

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