Shrinkflation-weary consumers turn to private label

By Ryan Daily

- Last updated on GMT

Image Credit: Getty Images - LordHenriVoton
Image Credit: Getty Images - LordHenriVoton

Related tags shrinkflation Inflation Private label

Raising prices while simultaneously shrinking products to offset higher inflation could cost brands more in the long term, suggests a new survey from YouGov that found consumers turned off by shrinkflation are turning to private label.

In a recent survey, market research company YouGov interviewed over 1,100 US adults about their concerns on shrinkflation​ and the most impacted product categories. YouGov found 41% of surveyed consumers are very concerned, 32% are fairly concerned, 13% were not very concerned, and 3% said they were not at all concerned.

Consumers also shared where they see shrinkflation: about half said they noticed it in chips, confections, and nuts, and 46% in dry goods like cereal, flour, sugar, pasta, and rice. On the lower end, 21% of consumers noted shrinkflation in fresh produce, 23% in instant/ready-to-cook soups and instant noodles, and 25% in baked goods.

Private label rises as consumers look for value

In response to shrinkflation, 46% of consumers said they would likely purchase generic products over name-brand items, and 45% said they would switch to a different brand. Additionally, 48% of US consumers older than 55 are more likely to stop purchasing some products, compared to 27% of those between 18 and 34 years. 

The move to private label also is documented in a 2023 US food and beverage trends report from Attest that found 73% of US consumers​ have “no intention of reverting to more household (and expensive) names,” and consumers are bargain-hunting. 

This poses a significant challenge to well-known brands that can’t compete on price and who may end up the losers here as these shifts in shopping habits may be permanent for several important sub-segments,​” said Attest founder and CEO Jeremy King.

While CPG brands will face challenges among private label products, they might not be able to raise prices again this year​, according to Vishal Garg, partner at Strategy& (a member of the PwC Network). Though CPG brands like Coca-Cola​, PepsiCo​, Nestle, and others raised prices in 2022 to grow their business, “passing on the same price increase to consumers in 2023 will be detrimental,​” Garg said.

Instead, Garg suggested CPG brands focus on net revenue management, which might require cutting back on marketing and prioritizing investment dollars. 

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