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“We are experiencing the first wave of hidden price hikes”

Anyone who will be reaching for the familiar products in the food trade in the next few weeks should take a closer look than usual.

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“We are experiencing the first wave of hidden price hikes”

Anyone who will be reaching for the familiar products in the food trade in the next few weeks should take a closer look than usual. Because it is quite possible that the familiar pack or even the contents of the pack have shrunk, even if the price is the same as before. "We are currently experiencing the first wave of such hidden price increases," said Armin Valet, food expert at the Hamburg Consumer Center of the German Press Agency. "But I think the high point is yet to come."

Valet has been observing for years how manufacturers and retailers use pack sizes to disguise price increases and chooses a deceptive pack of the year every twelve months. At the moment there are a lot of complaints about such tricks at the Hamburg consumer center, said Valet.

The background is clear: food prices are currently rising dramatically. According to the Federal Statistical Office, food and non-alcoholic beverages were 14 percent more expensive in July than a year earlier. Increased raw material prices are just as noticeable here as higher energy costs or additional expenses for logistics as a result of the corona pandemic and the Ukraine war.

There is a great temptation for manufacturers and retailers to hide the price increase. If the pack shrinks a bit, it's often less noticeable than if the price goes up. There's even a word for it: "shrinkflation" - a combination of the English word for shrink - and inflation.

"We will see this more often in the future than in the past," says marketing expert Martin Fassnacht from the WHU business school in Düsseldorf. The reason: retailers and manufacturers were reluctant to exceed the usual price thresholds, such as 1.99 euros. "If such a threshold is exceeded, a product suddenly appears significantly more expensive and there is a risk that the sales volume will collapse drastically," says Fassnacht, describing the problem.

The expert certainly understands this practice. However, he thinks that the manufacturers should then play their cards open to the consumers. "For reasons of fairness, it is important that the manufacturers also reduce the packaging when they reduce quantities." Then they could certainly hope for understanding from consumers. "Some people may be happy that they don't have to pay more because of the reduction in volume."

There are currently plenty of examples of such "shrinkage cures". Haribo, for example, recently reduced its gold bear bag from 200 to 175 grams. The recommended price of 0.99 cents remained the same - despite 12.5 percent less content. "As a company, since the beginning of the year we have been confronted with extraordinarily rising costs for high-quality ingredients, but also for foils, packaging materials, cardboard boxes as well as energy and logistics in the high double-digit range," said Haribo, explaining the step. The company is adjusting packaging sizes and price to remain affordable.

"It was important to us that we no longer have "air" in the bag, i.e. keeping the size of the bag, but also making the bag visibly smaller," emphasized a company spokesman. As a result, the reduction in the filling quantity is clearly recognizable to customers.

Branded goods manufacturer Henkel also took a similar approach with its fabric softener Vernel. "Since we were not able to fully absorb the cost increases in some cases, we decided to partially adjust the filling quantities of our products," the company reported. The snacks manufacturer Intersnack was also forced to "adjust the filling quantity of the ültje peanuts" due to the increase in costs. But consumer advocates have also encountered shrinking package contents for jam, margarine, crisps and even frozen pizza in recent weeks.

That's not forbidden, admits Valet. But of course it is a trickery at the expense of the customers. According to him, it is striking that supermarkets and discounters are increasingly resorting to such hidden price increases for their own brands. This has been a rarity in the past.

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