'Shrinkflation' in the Fresh Food Industry

Posted 04/01/19 16:39


‘Shrinkflation’ in the Fresh Food Industry

‘Shrinkflation’ as a phenomenon has existed in the food industry for many years – the practice of reducing the size of food products, or changing the ingredient ratios, while maintaining the price. Driven by increasing raw material and production costs, the practice is seen as a vital strategy in combatting the increase in import costs encountered since sterling depreciated.

Analysis from the UK’s Office of National Statistics highlights that over 2,500 consumer products have reduced in size over the past five years, despite being sold for the same price or higher. Just-Food explains that the problem goes beyond consumers receiving less product for their money. Cutting costs can also lead to poorer quality foods; 72% of manufacturers surveyed admitted that when cost pressures rise they will use inferior ingredients and cheaper raw materials. However, many fresh food manufacturers promote themselves as offering the “very best” produce to their customers, so ‘shrinkflation’ may harm their company’s reputation.

The rise of the discount chain in the UK has, in part, been buoyed by consumers trying cheaper non-branded items as the quality of the premium brand versions has slipped. With their focus on price, lower budget retailers have not been impacted in the same way as those regarded as a premium brand.

Some Manufacturers have successfully marketed ‘shrinkflation’ as a reaction to changes in lifestyle. With a growing interest in the link between diet and well-being in the UK, the process of reducing product weight and size for lower calories can be seen as a conscious effort to support healthy living. Omitting ingredients such as butter and oils contributes to a healthier diet; and comes with the added bonus of making certain products cheaper to produce.

Whether ‘shrinkflation’ is a result of rising ingredients prices, the relationship between import and exchange rates or a reaction to increased consumer attention to diet, it is important for supply chains to remain flexible in order to meet industry demands. An ERP system that complies with regulatory requirements while adapting to changes in market trends is essential.

Infor Cloudsuite Fresh Produce is a flexible solution that adds functionality, resulting in improved new product innovation as well as smarter forecasting, inventory management and production scheduling. In an environment where manufacturer’s reactions to consumer trends have a tremendous effect on the market, the advanced technology of Infor Cloud deployment provides comprehensive and fully operational solutions for produce manufacturers.

If you’re looking for a versatile, Cloud-based ERP solution designed specifically for the Fresh Food industry, click here for more information on Infor M3. Alternatively, click here to speak to one of our ERP expert



Topics: in2grate, erp, manufacturing, erp solution, manufacturing technology, infor, infor xa, supply chain management, supply chain demand, automotive, automotive erp, digital transformation, erp systems, manufacturing trends, discrete manufacturing, cloudsolutions

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