Consumers facing ‘super shrinkflation’ of inflated retail prices on confectionery and snacks

Consumers in the UK are facing the prospect of ‘super shrinkflation’ in which prices across a number of categories including confectionery, snacks and bakery ranges, continue to rise, while product sizes are continually reduced owing to inflated production costs, writes Neill Barston.

The situation was detailed in a report from the Daily Telegraph paper, which noted that the manufacturing phenomenon had become increasingly widespread amid a backdrop of the highest food prices seen in Britain for 40 years have negatively impacted households during the past year.

As Confectionery Production has previously highlighted, the concept of shrinkflation has been around for many years, in which portion sizes are reduced – but as costs of manufacturing have increased some 35% across the sector in the past three years according to latest analysis from the Food and Drink Federation, many companies have been tempted into ramping up the reduction in product size.

According to the organisation’s own assessment, several major factors have influenced the situation, including the UK’s Brexit decision impacting on trading and import/export costs, the Covid-19 pandemic, and the ongoing war in Ukraine significantly increasing grain, wheat and oil prices within the sector.

Economist have warned that food inflation is set to remain in double-digit territory for the remainder of 2023, with confectionery and snacks experiencing price-hikes of around 20% within the past year – which has directly led to slowdown in sales for some categories, including premium chocolate.

Industry study
Notably, according to the Daily Telegraph’s investigation, some products had now doubled in price within the category, with key increases including McVities reducing digestive biscuit packs from 400g to 360g, but raising the price from £1.80 to £2, and Penguin multi-pack of chocolate biscuits going from being eight-pack ranges, to seven, yet the price rose from £1.25 to £1.50. Similarly, Magnum ice-cream reportedly recently reduced the size of its individual items from 110g to 100g, but kept the same retailing price of £3, with Cheetos multi-pack crisps also doubling in cost, now 25p per bag rather than 12 as it had been previously.

In its analysis of the situation, the FDF said that increased red tape involved in trading with the EU, effectively raising the costs for trading with the continental bloc.  It cited the UK-EU Trade and Cooperation Agreement (TCA), shaping agreements with the country’s nearest neighbours and accounting for around 60% of our sector’s total trade was not agreed until 24 December 2020. Notably, it acknowledged that businesses ‘were literally given no warning or time to prepare and the trade data clearly shows the impacts’, which resulted in a major dip in trade during 2021.

While the export statistics have to shown some sign of positive momentum building within the past 18 months, they are still considerably below pre Covid-19 levels, with a number of companies speaking to Confectionery Production in confidence to confirm that many categories – including chocolate and snacks, remain notably negatively impacted in terms of export opportunities to mainland Europe because of the significant increase in trading costs and logistics time taken to process orders.

In many instances, this has meant that small and medium-sized enterprises have ceased exporting to the rest of Europe from the UK, as it is presently considered by many to be too prohibitively expensive and uncertain given the new regulatory burdens that Brexit has placed upon them.



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