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How Nigerian companies are ripping Nigerians off with Shrinkflation

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How Nigerian companies are ripping Nigerians off with Shrinkflation

In a country like Nigeria where consumer protection is weak, shrinkflation thrives, with regulators unlooking as Fast Moving Consumer Goods companies rob their customers legally.

Shrinkflation has eaten deep into the fibre of consumers goods industry, thanks to the consumer behaviour of Nigerians which automatically adjusts to market offerings without raising an eyebrow.

For decades, with the help of shrinkflation, companies producing packaged foods, beverages and toiletries have continued to short-change their customers by selling products of lower quality or quantity to consumers at an higher price – which means consumers pay more for less.

You might be wondering “what is shrinkflation”?, it is a cost saving strategy employed by companies in consumer industry, which shrink their product-size but maintain the initial price or hike it – shrinkflation is the reason many Nigerians have thought companies will one day, start selling packaged air rather than their product.

In 2018, the Consumer Protection Council (CPC) Deputy Director, Abiodun Obimuyiwa, had acknowledged the existence of shrinkflation and how consumer industry companies use it to rip-off their customers; promising to probe.

“Information reaching our offices showed that consumers feel short-changed with the goods purchased with their hard-earned money,” Obimuyiwa had said, but despite talking tough, the agency’s roar seem to have lost its fear factor, as shrinkflation is still very much predominant among consumer industry.

Companies involved in shrinkflation

Shrinkflation mostly occurs within companies manufacturing packaged foods, beverages and toiletries. These companies disguise shrinkflation as rebranding of their products from a marketing standpoint.

Sometimes, the adoption of shrinkflation leaves unnoticeable trace, but in most cases, the adjust in product-size is so visible, it’s like a punch to your face, with your wallet feeling the hit.

Packaged foods:

Several notable companies have indulged in shrinkflation and are still applying it. Recently, Sardine Titus have been aggressive with the application of shrinkflation, with the foods company reducing the number of its fish from four to two, while also reducing their size, as well as increasing the price from N200 to N350.

Queens Bake, a confectionery company, reduced the size and shape of its slice bread to almost the same size and shape of butterfly. Despite reducing the size of its slice bread, Queen Of All Heart Limited increased its price from N300 to N400

Other products that have engaged in shrinkflation include Burger peanuts, the flag bearer of products that will soon sell air to its consumers, as the snack company has been heavily criticised for inflating its sachet with more air than peanuts.

Biscuits manufacturers are highly involved in shrinkflation, with products like Coaster, Crackers, Speedy and more reducing their biscuit while increasing the price. For example, Coaster once sold six biscuits in a sachet for N5, but now sells three to four biscuits for N10.

Eggs are also taking the same shape, as peewee or pullet eggs, which are the smallest egg size, are now sold at a price previously set for medium egg. Meanwhile, candy makers are also guilty of this act.

Toiletries:

Manufacturers of toilet paper have also stylishly adopted shrinkflation by expanding the hole within the tissue. The hole is expanding to the stage it will accommodate ones palm and hang on the wrist, but the price still remains the same (N80).

Beverages:

Shrinkflation caused a Cola-war in the Nigerian beverage market following Coca-cola and Pepsi’s decision to “rebrand” their product-size while also increasing their product price from N100 to N120.

They portrayed shrinkflation as rebranding and used Nigerian music stars to promote sales, but their rebranding created an opportunity for Bigi Cola and Big Cola to enter the market with bigger size product at a cheaper cost.

This led to Cola-war among the non-alcoholic companies, forcing Coca-cola and Pepsi to retrace their step, as consumer buying pattern changed and loyalty was switched to Big Cola.

Why do companies engage in shrinkflation

The adoption of shrinkflation by companies have most times been tied to economic downturn and rising inflation which causes company operating expenses to shoot up.

Currently, Nigeria’s inflation rate is at its highest, rising from 15.75 percent in December 2020 to 16.47 percent in January 2021. The rising inflation has affected cost of production, increasing companies expenses within the year.

Read also: BUSINESS REVIEW: How are Nigerian companies breaking into the global scene faring?

Amid situation like this, it’s a norm for companies to pass on part of their production cost on their consumers, but while product price is expected to rise due to surge in inflation rate, it shouldn’t cause the reduction in product quantity or quality as seen with Nigerian consumer goods.

Consumers can fight against it…. but

Consumers can fight shrinkflation, but they can’t win the war without the support of regulator due to these companies dominance in the consumer market. Consumers were able to fight the attempt by Coca-cola and Pepsi because a new product entered the market at that point.

But this is a one-off situation, as smaller companies are often prevented from breaking the dominance of bigger corporations. An example is the pollusion between South Africa’s four largest milling companies to gain unfair market advantage.

The companies:

Premier Foods, Tiger Brands, Foodcorp and Pioneer Foods (makers of Nigerian loaf, Butterfield), colluded to disrupt their market’s equilibrium. While in reality, they were competing against one another, they were also meeting secretly in churches, hotels and stadia to fix market movements.

South African Competition Commission discovered the collusion between the four companies and fined them, but since Nigeria’s Consumer Protection Council promised to investigate the rip-off, no scapegoat has been produced.

So m, while Nigeria’s CPC can’t stop companies from increasing their price to reflect market realities, the agency can prevent these companies from forcing (due to their dominance) their customers to pay more for less.

By Fakoyejo Olalekan…

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