In recent years, brands have resorted to a practice that is widely used in some countries called “shrinkflation” or “downsizing”, which is exactly turning their packaging into an average of 10% smaller, and thus a lower price. There is less content, the freight is cheaper because they send more products the smaller they are, without reducing their final value proportionally.
Consumer associations from Mendoza indicated that these techniques have been emphasized in recent years, despite the fact that they began to appear in 2001. year, after a strong devaluation of the currency.
As they point out, companies use this device in order not to increase their value with the rate of inflation and continue to seduce the consumer, since most of them are not aware of it, because the drop in grams in some cases is very small. They indicated that the products that used this strategy the most were dairy products, rice, noodles, oil, personal and household cleaning products, and canned pulses.
A recurring phenomenon
It is enough to go through the shelves to recognize that various products have been reduced or to buy – for example – a package of biscuits, we find that more than half of the package is air or soaps, they easily fit in the palm of our hand.hand. With this strategy, companies absorb their cost increases and consumers continue to buy the product, often without noticing the difference.
One of the cases of this measure are snacks. French fries, for example, of the leading brand, increased from 96 grams to 85 grams, and then to 46 grams. Hygiene products are another good example of this phenomenon. Rexona soap reduced the packaging from 150 grams to 125 grams.
On the other hand, many deodorants have reduced their packaging by resorting to “green” marketing and provide a concentrated presentation in small containers. We are talking about the Nivea or Dove brands, which went from 169 ml to 85 ml. The same happens with laundry soaps. An example is Vivere, whose option is concentrated in a small tank.
In terms of stock items, pulses were the center of the “downsizing”. Alco peas dropped from 350 grams to 340 grams; Arcor beans, in 2014 the package was 350 grams, today it is 320 grams; and La Campagnola brand tuna has significantly reduced its size from 170 grams to 120.
For José Luis Ramón, lawyer of the NGO Protectora, what also often happens is that people perceive it, but prefer to suppress the volume compared to the first brand; and they use advertising to ensure “competitive” prices. However, “the consumer must know that it is not free, and the consequence is a reduction in the quantity, and that at the end of the month they will realize that they will spend more for the same quantity as a while ago”, according to the professional.
Faced with this, Susana Yelich, president of the consumer protection association Prodelco, believes that consumers must be more careful when buying to avoid this type of inconvenience, and pay less for the same quality. The thing is that, according to him, many supermarket brands, that is, second lines, are produced by the same factories as the first brands.
Daniel Garro, economist at Value International Group, assures that this phenomenon, which started in 2001, has grown over the years. “The big brands have been reducing volume without increasing or moderately increasing the price, but given all this they have to buy more, spending on these products is increasing. This is why consumers perceive increases in supermarket billing at the end of the month,” the expert noted.
Another phenomenon that José Luis Ramón notices is that there are products that have decided to “add” properties and thus increase their value. Now you can see ‘calcified’ herbs, milks with extra calcium, yogurts with vitamins. With this increase in marketing and more sophisticated packaging, the value increases, when the quality is the same,” said the expert.
In fact, Los Andes took La Serenísima brand butter as an example. The “classic” line of 100 grams has a value of about 16 dollars, while the same package but “Extra Vit AE” is close to 18 dollars.
Likewise, Susana Yelich added other strategies, namely “mini prices” and “various pack sizes”. In the case of the first practice, it occurs mainly in yogurt. Yogurísimo recently launched its $3.99 mini yogurt in a much smaller package than we’re used to. While in the case of the second, it often appears in products in the store, such as cookies. For example, Terrabusi Variety can be found in 600 gram, 400 and 300 gram presentations.
In the end, Protector’s lawyer argued that there was little they could do legally, but revealed that it should be in the hands of Consumer Protection. In addition, everyone agreed that this is also achieved by the fact that today’s consumers visit the shelves in the few free minutes they have in the day. Because of this, brands “exploit”, change, improve packaging, include marketing, with the aim of hiding the price.
For the majority of those consulted, the explanation of this phenomenon is purely financial, since by physically reducing their products, that is, their quantity, they save costs and increase their profitability. In this way, they control inflation, and it is not actually reflected in the prices of the products on the shelves.
In fact, as Daniel Garro explained, this started in those countries where governments heavily control prices, given their high inflation.
“Companies, in order to avoid problems with the respective trade secretaries, have started to reduce the quantity and/or quality they put in the same container as a way to increase the price without doing so; but in reality they are, reducing quality and/or quantity.” As Garro explained, all this is nothing more than hidden inflation, which is not taken into account.
A lawyer for the non-governmental organization Protectora agreed with these claims, and found that this was the way companies found to not transfer all their cost increases to the final price of the product.
In the case of practices such as low prices or different container sizes, for Yelich, “this, in addition to creating confusion, is nothing more than hiding price increases.”
The increase in prices changed the parameters of microeconomics. There are new patterns of behavior. The promotion of consumption and debt in the personal economy has been abandoned. On the contrary, it is now about defending purchasing power. “You never beat inflation.
The consumer tries to fight it, but it runs from behind. Therefore, it tends to be more selective due to price distortion. The same product has different values in stores in the same block. In times of inflation, people start to downgrade and switch brands. Then the quantity decreases. Diet has also changed,” says Mariano Otálora, personal finance expert.
The first quarter of the year has always represented frustration for the consumer. This is the period in which price increases in collective negotiations have not yet been resolved, and “new prices” hit the “old salary”. If before, with annual inflation of 25%, the impulsive response was to lower the quality, but to keep the purchase of goods and services with high indebtedness – trips, motorcycles, mobile phones, appliances, everything in installments -, now consumer behavior is more far-sighted
“The key variables for defining expectations are the dollar and inflation. There is no need to worry too much about the 4.1 percent increase in January because it also includes seasonal components – such as hotels and restaurants – but if the Government manages to solve the parity problems well and quickly and reduce the income tax, by April or May the consumer will feel that his salary has changed and during the rest of the year he will be able to continue with the tendency to enter into card loans,” says economist Martín Tetaz.
“When people can consume, they breathe different air.” The thesis was written by Guillermo Oliveto, an expert in the study of consumer behavior. Consumption is a phenomenon that already goes beyond market studies or company profitability. Consumption records the state of mind of society, it indicates its confidence or its disappointment. It expresses the social impact of official policies.
Consumption is a variable that every ruler pays attention to because he does not ignore its political implications. The same as inflation, which can become a determining factor for consumption and the direction of the economy.
Two months into the government, price increases have become the most delicate obstacle in the management of Mauricio Macri’s government. The Department of Statistics and Census of the City of Buenos Aires – which temporarily replaces Indec – an organization that has been called into question again by the movements that took place this week after the departure of the organization’s technical director Graciela Bevacqua – reported that in January Inflation rose to 4.1 how much. It exceeded 3.9% in December and doubled to 2% in January last year.
For its part, according to the measurements of Consumer Action (Adelco), which records monthly variations in 22 food products and 6 hygiene products – and which in 2012 had to stop the dissemination of its price basket due to pressure from former trade secretary Guillermo Moreno -, the variation of the leading brands in January was 6.29% higher compared to December, and 6.76% for other brands.
Price changes also change consumer behavior. “We can no longer go to the supermarket to look for the brand we always buy. You need to switch products, start reading labels, calculate weight and don’t buy if the price is excessive. More than the mobile application about prices in different supermarkets that the Government will launch, there should be some educational campaign for consumers, which can be a useful tool for those who do not have access to the Internet,” recommends Claudia Collado, owner of Adelco.
Economist Ariel Setton attributes the inflation in recent months to the lifting of agricultural holdings, with a direct increase in the prices of local products and the devaluation of the peso, which shifted the cost of imported products to prices. Setton believes that the government will try to contain the rise in prices with “measures to reduce demand”.
To make the value of the peso more effective, he recommends some keys to “smart spending,” with the use of a debit card (5% cash back on purchases up to a thousand pesos); Stock up on non-perishable products to get ahead of price increases, use the Ahora12 system or any interest-free installment plan and research prices online for more expensive products.
“You can see differences of up to 40%.” The change of paradigm – from a consumerist model to another that seeks low inflation as a declared goal – is manifested in a change in the modality of sales: in stores, payment in 12 or 18 installments and promotions in supermarkets and shopping centers, which had rates or plans subsidized by the state, as was the case in 2015.
The adjustment of the economy to the new equilibrium prices will also bring about the adjustment of the consumer who will now have to develop greater ‘financial gymnastics’ in order not to make a mistake in the purchase, given that the available money will be less than usual, “says Nicolás. Litvinoff, an expert in personal finance.
Litvinoff believes that the long-standing idea that paying in installments “beats inflation” is wrong. “Often when paying by card, the merchant charges an additional amount to the price. And it’s important to compare the cash price of the product with the financed price before buying,” he suggests.
Source: Los Andes