French supermarket chain Carrefour has taken a bold step this week by introducing warning labels on its shelves to alert shoppers to the practice of “shrinkflation,” where manufacturers reduce product sizes instead of increasing prices. The move is intended to exert pressure on major consumer goods suppliers like Nestlé, PepsiCo, and Unilever to address this issue as contract negotiations approach.
Carrefour has placed price warning labels on various products, including Lindt chocolates and Lipton iced tea. The objective is to draw attention to instances where the product size has decreased while the price has increased, even though raw material costs have eased. Carrefour’s initiative aims to garner consumer support as retailers prepare for negotiations with some of the world’s largest brands, set to commence soon and conclude by October 15th.
So far, Carrefour has affixed these labels to 26 products in its stores across France. The labels read: “This product has seen its volume or weight fall and the effective price from the supplier rise.”
For instance, Carrefour highlighted that a bottle of sugar-free peach-flavored Lipton iced tea, produced by PepsiCo, has shrunk from 1.5 liters to 1.25 liters, resulting in a 40% effective increase in the price per liter.
Nestlé’s Guigoz infant formula reduced from 900 grams to 830 grams, while Unilever’s Viennetta ice-cream cake shrank from 350 grams to 320 grams.
Stefen Bompais, the director of client communications at Carrefour, explained the intention behind this move, stating, “Obviously, the aim in stigmatizing these products is to be able to tell manufacturers to rethink their pricing policy.”
Carrefour’s CEO, Alexandre Bompard, who also leads the retail industry lobby group FDC, has repeatedly emphasized that consumer goods companies have not been cooperating in efforts to reduce the prices of essential items, despite a decline in raw material costs.
The French finance minister, Bruno Le Maire, echoed these concerns, urging major retailers and consumer groups to cut prices in an effort to combat rising costs. After recent meetings, Le Maire noted that companies such as Unilever, Nestlé, and PepsiCo were not aligning with the goal of lowering prices.
Among the products highlighted by Carrefour’s “shrinkflation” labels was Lindt’s “chocolat au lait extra fin.”
In response to these actions, a Lindt spokesperson explained that the company had increased its prices by an average of 9.3% in line with local cost structures and had made efforts to absorb increased costs through efficiency measures.
PepsiCo did not provide a comment, while Nestlé and Unilever declined to comment on the matter.
Consumer groups assert that “shrinkflation” is a widespread practice, not limited to manufacturers but also present in supermarkets’ own-label products.
Carrefour’s shrinkflation warnings are currently in place in all of its French stores and will continue until the targeted suppliers agree to price reductions. While the retailer may extend warnings to other products, it does not plan to expand this initiative to other countries.