How ‘shrinkflation’ is impacting your cereal – and making you pay more for less

On Mar 25, 2024

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Big food manufacturers are downsizing products without downsizing prices in a practice known as “shrinkflation” that irritates shoppers and makes pricing comparisons in a cost-of-living crisis all the more difficult.

After the chief executive of Kellogg’s suggested that financially-strained families could cope by eating “cereal for dinner”, researchers at Deakin University investigated whether the US food giant had also been shrinking its products in Australia, reducing value for money.

Researchers at the university’s Institute for Health Transformation found that seven Kellogg’s cereal boxes had shrunk since 2019, while 22 product packs were unchanged.

The Deakin data shows there are large differences in cereal prices that are not immediately clear from the price tag, given the abundance of changing pack sizes.

Kellogg’s more expensive cereals are priced at over $2 per 100 grams, a list that tends to include the more extravagant – and sugary – offerings. Older household favourites such as Corn Flakes often cost less than half that amount.

As expected, larger size packs were generally cheaper than the same product’s smaller sizes.

Deakin’s Christina Zorbas, who is a dietitian, says while wholegrain options are “not a terrible dinner option”, they are still “not a nutritionally complete choice as a meal”.

“You can also pay nearly $10 a box for something that’s just full of sugar,” says Zorbas.

“We already know too many people are having too much salt and too much sugar, and that predisposes people to having type 2 diabetes and high blood pressure and a wealth of other chronic conditions.”

Food manufacturers can improve profit margins by shrinking their products, especially when it accompanies a price increase. While companies such as Kellogg’s negotiate wholesale price changes with retailers, supermarkets ultimately set prices for shoppers.

Kellanova, formerly known as the Kellogg Company, said in a statement it reduced the weight of some products due to very high food production costs, as well as the impact of supply chain and inflationary pressures.

“We believe that Kellanova continues to offer Aussie consumers great tasting and great value food and are proud that we source most of our ingredients from Aussie farmers and make most of our cereals in Australia, while continuing to reduce our impact on the environment,” a spokesperson for Kellanova said.

A Coles spokesperson says it was not common for the supermarket’s own products to change size and that it was working hard to keep prices affordable for Australian households.

A Woolworths spokesperson says when there are rising input costs for products, the supermarket tries to minimise any price increases for customers by looking for greater efficiencies, productivity and sourcing.

Last year, the French supermarket chain Carrefour tried to combat the shrinking trend by putting labels on shelves warning shoppers of the practice, pressuring packaged food suppliers. Australia’s major supermarket chains declined to follow suit.

Australian supermarkets are currently subject to a Senate inquiry and 12-month pricing probe by the competition regulator, amid…