Consumers Are Angry, Regulators Are Ready to Act... What Is Shrinkflation?

"An unacceptable price increase." French retail giant Carrefour recently removed American PepsiCo products from its store shelves. This measure was implemented simultaneously not only in France but also in major European countries such as Italy, Spain, and Belgium. Carrefour cited "repeated sneaky (price) increases" as the reason for the removal. Carrefour pointed out, "Lipton beverages produced by PepsiCo kept the price the same while reducing the volume from 1.5ℓ to 1.25ℓ, effectively resulting in a price increase." They imposed a strict penalty by removing the products from shelves due to this deceptive practice of secretly reducing product volume to effectively raise prices without consumers' knowledge. This decision was made amid growing global controversy over 'shrinkflation' in the food industry. Experts evaluated this move as significant in sending a warning message to food companies continuing sneaky price increases.

The Korea Consumer Agency announced that, as a result of investigating shrinkflation in processed foods managed by Chamgagyeok and products mentioned in media reports, the volume of 37 products across 9 categories has actually decreased over the past year. The photo shows two packs of Baeksul Grill Vienna displayed at Hanaro Mart Yangjae branch in Seocho-gu, Seoul, on the 13th. Photo by Jinhyung Kang aymsdream@

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In the era of 'inflation,' shrinkflation is rampant worldwide. Shrinkflation is rampant not only in Europe but also in Korea. According to a survey by the Korea Consumer Agency on 209 processed food products through the comprehensive price portal Chamgajung, 19 products reduced their volume in the past year until November last year. Products such as Dongwon F&B's 'Yangban Perilla Oil Seaweed,' Haitai's 'Hometown Dumplings,' and OB Beer’s 'Cass canned beer (8-can pack)' saw volume reductions of up to 20%.

Four types of Pulmuone hot dogs decreased from 5 pieces per pack to 4 pieces, and CJ CheilJedang's 'Charcoal-grilled Barbecue Bar' reduced its weight from 280g to 230g. Companies did not properly inform consumers about these changes in weight (quantity). Some manufacturers acknowledge the volume changes but argue that these are renewed products with changes in packaging and recipes.

Shrinkflation is a compound word of 'shrink' and 'inflation.' As prolonged high prices make consumers sensitive to prices, companies indirectly raise prices by reducing the size or quantity of products instead of increasing the price. Manufacturers can secretly reduce volume because they are not obligated to notify consumers about volume changes.

As consumer anger grows, the government is preparing measures to prevent shrinkflation. The Consumer Agency plans to establish a comprehensive monitoring system for volume changes by collecting volume information from manufacturers and distributors.

Legal sanctions that can punish offenders are also being prepared. The Fair Trade Commission is pushing to revise the 'Designation of Unfair Consumer Transaction Acts by Business Operators' to classify changing important product details such as volume without notifying consumers as unfair business practices and impose fines for violations.

Once the revision is implemented, if important details such as volume are changed, the content must be posted on packaging, manufacturer websites, or sales locations and notified to the Korea Consumer Agency. Violations will incur a fine of 5 million KRW, and a second violation will result in a 10 million KRW fine. The revision will collect opinions from various sectors through administrative notice until the 16th, and after regulatory review procedures, it is expected to be promulgated as early as next month. If no grace period is set, it will be enforced next month.

Measures against shrinkflation are also emerging overseas. On the 8th, Hungary's Ministry of Economy announced plans to legislate from March requiring companies to notify consumers when product volumes change. The German government is also reviewing legislation to ban the deceptive practice of secretly reducing volume while keeping prices the same, calling it a "deceptive practice." The UK and French governments are also preparing administrative and legal sanctions to prevent shrinkflation.

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