Brands could be named and shamed in ‘shrinkflation’ crackdown

3 weeks ago 7

Companies that shrink product sizes to boost profit margins could be required to expose themselves to customers, and face fines for non-compliance, as the federal government moves to crack down on grocery pricing.

Labor will begin consultations with industry and consumer groups on Monday to consider strengthening pricing rules following the Australian Competition and Consumer Commission’s (ACCC) supermarket inquiry which found Australia’s supermarkets were some of the most profitable in the world.

Unit pricing would be displayed more prominently on the shelves to inform customer choice.

Assistant Minister for Productivity and Competition Andrew Leigh said “shrinkflation”, where a company’s product decreases in size with no change to its price, had become pervasive across brands and products, and Australians were frustrated.

“Every time I speak to constituents about this or do media about it, I’m flooded with examples of where people feel as though they’re getting ripped off by retailers,” he said.

“It’s the extra air in the bottom of the bag that didn’t seem to be there last month. It’s the chocolate bar that’s lost a couple of squares when the price hasn’t changed. We’ve even seen it in toilet paper – one of the toilet paper retailers reduced the size of their squares from 11 centimetres to 10.”

The ACCC’s supermarket inquiry report, released in March, made 20 recommendations to improve supermarket competition and consumer experience, including requiring companies to notify customers when they shrink a product.

The inquiry heard complaints from consumers that shrinkflation was “happening with every product”, with packaging redesigned to hide a reduction in quantity.

Labor promised during its election campaign to implement the recommendations of the report in full.

Leigh said other reforms being considered included displaying unit prices more prominently on shelves, and expanding which retailers were covered by the Unit Price Code, which regulates supermarket pricing.

“At the moment, it’s the biggest supermarkets – we’re looking at whether it would make sense to bring in small retailers as well,” he said.

Andrew Leigh said Australians were fed up with shrinkflation.

The government will also seek feedback on introducing court-imposed fines for companies that breach the rules, and standardising units for comparison across products.

“There’s some suggestion that in certain cases, shoppers are looking at a per 100 gram price on one side of the shelf, and then up to a kilogram on the other side. And no one wants to have to do maths classes when you’re turning up to just do the weekly shop,” Leigh said.

The consultation will run for three weeks from Monday and will inform changes to the code to empower Australians to decide which products were the best value, Leigh said.

“We want to make sure that consumers have the information they need in order to make informed decisions at the checkout, and that means knowing when shrinkflation is going on in front of you,” he said.

“We want feedback on what steps we can take next to crack down on diminishing sizes. We’re looking at making it easier to expose brands offering less value for money and making it easier to read unit pricing and compare costs.”

The ACCC inquiry was prompted by public outcry over supermarket price gouging during a cost-of-living crisis.

The government has since given $30 million to the regulator to increase monitoring of the sector and to tackle supermarkets and retailers misleading consumers, as well as expanded funding for consumer group CHOICE to give shoppers more information about supermarket prices.