2024-03-19 09:35:36
All over the world and for several months already, manufacturers in the agri-food sector are changing their commercial techniques and taking avenues that might be described as misleading to reap more profits by altering products.
“Shrinkflation”, “Cheapflation”, “Greedflation”, these anglicisms that are difficult to understand and pronounce are circulating everywhere. Their goal is to support consumer pockets. But that’s just the tip of the iceberg. While the supermarket bill is rising rapidly, who benefits from inflation on food products?
In recent months, the term “Shrinkflation” has appeared, which is a contraction of “Shrink” which, in English, means to shrink, and the word “inflation”. But this does not, unfortunately, mean “reducing inflation” as we would all like to believe. It is actually a marketing practice which consists of reducing the quantity of a product while maintaining the same price, or even increasing it.
Lower quality
Fraudulent practices are evolving and today, we are talking regarding “Greedflation”, from the English “greed”, which consists of a brand taking advantage of inflation to increase its selling prices while the costs production rose very little to justify an increase in prices. This practice goes unnoticed because of widespread inflation.
But, sometimes, implementing a “greedflation” strategy comes from the desire of business leaders to increase their margins at the expense of the market and consumers. Discovery of this practice by customers can result in a drop in sales and a degradation of the company’s image, because it will be perceived as being unethical and supportive of society as a whole.
We are also talking regarding “Cheapflation”, a practice just as criticized as those which preceded it, and which consists, this time, of modifying a recipe to reduce costs. A contraction of “cheap” and “inflation”, it designates the substitution, in a recipe, of an ingredient with a product of less good quality, but without informing the buyer and without thereby lowering the price of the product. A practice which, as with “Shrinkflation”, is not illegal, but which deceives the consumer.
Concretely and on consumers’ plates, this practice results in the degradation of the nutritional quality of a product, namely “the energy value, the lipid, protein, vitamin or organoleptic content linked to the appearance, taste, flavor,” explain some nutritionists. We must not forget that quality is the guarantee for retaining customers, conquering new markets, increasing profitability, limiting complaints, distinguishing yourself from competitors, etc.
However, the solution exists!
Recently, the French association “Foodwatch”, which fights once morest abuses in the agri-food sector, identified six products from major brands whose composition had been altered while their prices increased. According to the association, manufacturers generally justify these changes by an increase in the price of raw materials during periods of inflation, “but this in no way excuses the opacity on recipe or format modifications, nor the increase in prices which is correlated with it,” she denounces. She therefore calls for more transparency. “More transparency on the construction of prices in the food aisles and clear rules to prevent excessive margins from one side or the other: two concrete demands to break the current climate of impunity and contribute to making products healthier and more sustainable. accessible for everyone. The giants of the food industry and mass distribution must no longer be able to make profits on the back of the right to healthy, chosen and sustainable food,” demands the association.
For their part, the manufacturers who were questioned justify the use of “Cheapflation” by the increase in the price of raw materials during periods of inflation. This is also explained by the shortage of some of them, which occurred following the avian flu or the war in Ukraine: prices are soaring and they are becoming too expensive to use. For “Foodwatch”, this does not justify this continued rise in prices.
However, for economists the solution exists without harming consumers. In this situation, the most attractive solution for brands and retailers is to monitor the competition’s prices and control their own prices. Using pricing instruments, it is possible to be aware of and adapt to price variations of competing companies, without blindly increasing prices or making decisions that impact the brand image.
Thus, this software makes it possible to establish a profit margin and other important variables for the company, so that the new prices are in its interest.
With price monitoring, it is also possible to develop a “dynamic pricing” strategy which would allow manufacturers to define the optimal price for each product, at any time and in the different sales channels.
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