A Heated Debate About Shrinkflation is Taking Place in France
10/26/2023 Retail Brands Industry Look into Europe Article

A Heated Debate About Shrinkflation is Taking Place in France

With its campaign to denounce shrinkflation, the French food group Carrefour has hit a nerve and has pre-empted politics.

France's Economy and Finance Minister Bruno Le Maire wants to curb shrinkflation by introducing stricter labeling laws. France's Economy and Finance Minister Bruno Le Maire wants to curb shrinkflation by introducing stricter labeling laws.

Orange-colored signs in Carrefour’s French stores read: “This product has less content and the price has gone up.” This has affected 26 products, including Lindt chocolate and Lipton iced tea. With the action, Carrefour wants to increase the pressure on manufacturers to lower prices in view of the negotiations for the coming year, reports Lebensmittelzeitung.

By way of background, two consecutive years of rising prices without wages keeping pace with high inflation are leaving their mark. The outlook for the future is rather bleak: the latest economic data provided by the French central bank for the third quarter show hardly any growth. In addition, more and more manufacturers are taking a liking to the old trick of selling less content in similarly sized packaging – at the same or a higher price. What used to be called deceptive packaging has been given a new name throughout Europe: shrinkflation.

Draft Legislation on the Table

Other manufacturers improve their profit margins by cutting back on the quality of ingredients, which is called cheapflation. Reason enough for the government in Paris to set the mood ahead of the annual talks between manufacturers and retailers. Economy and Finance Minister Bruno Le Maire speaks of fraud. Not only does he want to prescribe more frequent price negotiations, but he also wants to curb shrinkflation through a stricter labeling law. A draft law to this effect is already on the table. Consumers remain suspicious, as surveys by the market research institute Elabe show: The majority of French people do not expect the government’s measures to improve consumers’ purchasing power. Since May, the number of those who think so has risen sharply.
Shrinkflation is not fraud in legal terms. The minister knows this just as well as consumer advocates, who raise their voices against it in numerous television and radio broadcasts. They are concerned about morals, as they say. Large corporations such as Pepsi, Unilever, and Nestlé are in the line of fire of public criticism.

That the issue is becoming more political right now is no coincidence. “From September to March, the relationship between manufacturers and retailers in France is very tense because they are negotiating prices and contract terms for the coming year,” explains lawyer Alexandra Berg-Moussa, who specializes in competition law, in an interview with LZ. Customer frustration is rising, at least in France. As the Elabe study shows, consumers across all walks of life are complaining about price increases in the food industry – and the unwillingness of large retailers to lower their trade margins. This strong financial pressure leads to renunciation, as the market researchers explain, be it in the education of children, on vacation, or in food. Specifically, 56 percent forgo buying certain foods altogether, 41 percent buy cheaper products, and 28 percent switch to smaller quantities. The French are now especially doing without meat and fish. Forty-five percent say they no longer buy meat at all or buy smaller quantities, while the figure for fish is 33 percent. Organic products and sausages are hit hardest. This trend has been largely unbroken since May 2023.

Unpackaged Stores are Booming

Meanwhile, a completely different movement is taking advantage of the controversy over price increases, namely unpackaged stores. The boom in France continues. Carrefour is once again in the forefront with its store in Montesson, which is also testing selling unpackaged wares. There, orange-colored labels are once again hanging on some products, with the catchword anti-inflation. And the note: “This product is cheaper unpackaged.”

Read an article about the packaging market in France.