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Shrinkflation – the fight against deceptive packaging and consumer deception

Shrinkflation – the fight against deceptive packaging and consumer deception

Less content for the same price or even more: What sounds like a bad joke has become common practice in recent years. Shrinkflation is the name of this phenomenon, which food companies use to keep their profits stable or increase them. Of course, in times of increased supplier and production costs, companies also have to see where they stand. However, deceiving consumers with a psychological trick should not be the way to go. In France, there is now a regulation in place that requires consumers to be openly informed about deceptive packaging.

How shrinkflation deceives consumers

The packaging looks the same, the price is the same. Only a closer look reveals that the bag, which used to weigh 200 grams, now weighs only 175 grams. But humans are creatures of habit. When they see the familiar packaging and the familiar price, they don’t think that something might have changed. They assume that everything is the same. It is precisely this psychological component that companies take advantage of to make capital out of it – in the truest sense of the word. The companies themselves consider it necessary and clever, but consumer advocates speak of “fraud” and “secret rip-offs”.

Incidentally, the word ‘shrinkflation’ is a neologism composed of the terms ‘shrink’ and ‘inflation’.

France as a role model for consumer protection

France has already taken action against shrinkflation. Since July 1, 2024, medium-sized and large supermarkets with a floor space of at least 400 square meters have been obliged to label affected products accordingly. Signs should inform consumers simply and clearly about the reduced volume and the higher price associated with it – and this for a period of two months from the market launch of the modified product. After that, the respective label may be removed again.

Details on the prescribed label design

The labels must be clearly visible and legible, either directly on the packaging or in the immediate vicinity of the respective products. In practice, the second option is preferred for reasons of efficiency. The sign must indicate how the quantity has changed and the price per unit of measurement has increased. The latter must be in the same font size as the selling price on the conventional price label.

Who and what is excluded from the regulation

Stores with a surface area of less than 400 square meters, as well as online retailers and manufacturers, are exempt from the information requirement. Furthermore, the regulation does not apply to unpackaged food or other food whose quantity may vary. This includes products from the delicatessen department.

Note: In principle, the regulation is not limited to food. It also includes household items such as detergents.

Legal framework for the labeling requirement

The regulation was issued on April 16, 2024. It is based primarily on Article L. 410-2 of the ‘Code de commerce’, which is the French Commercial Code. This guarantees freedom of price as long as it is handled transparently. Article L. 441-4 from the same code is also relevant. It deals with the duty to provide information to consumers regarding food that is consumed regularly. There is a list of these goods that has been established by decree.

Note: According to Article L. 131-5 of the ‘Code de la consommation’, the French consumer protection law, retailers who violate the duty to provide information face a fine of up to 15,000 euros.

Openness: essential for satisfied customers

Shrinkflation is not the only tool that manufacturers use to deliberately deceive consumers in order to gain an advantage for themselves. There are also other methods, such as so-called greenwashing. Fortunately, this is now regulated by the EU Green Claims Directive. But regardless of how brands try to mislead consumers, every attempt is ultimately doomed to failure and can cause lasting damage to the reputation of the company in question – especially in the age of social media.

So why not just go in the opposite direction and distinguish yourself through openness? The modern, informed consumer appreciates honesty and rewards brands with their loyalty and possibly also with recommendations, which in turn can bring new customers. When observing the market, it becomes increasingly clear that in the end, the companies that establish their brands transparently from the outset will prevail and assert themselves.

Transparency as an opportunity for food retailers

What we just said about brands that operate transparently can be applied similarly to retailers: by presenting themselves openly and honestly to consumers, they sustainably strengthen consumer trust in their own company. The best example of this is Carrefour. As early as September 2023, the French retail and wholesale chain began voluntarily using orange labels to identify shrinkflation products, well before the country’s legal regulation was enacted and came into force.

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