Cost of Living - Shrinkflation is speeding up at an alarming rate

[cheesefest]

Think the shrinkflation is partially responsible for the obesity problem. People are eating two chocolate bars instead of one. As one current bar isn’t satisfying. The two current bars are 60% more than one old sized bar. So 60% more calories and fat.

These people don’t just do this with one item of food, but with many more.

 

[mid_gen]

Think the shrinkflation is partially responsible for the obesity problem. People are eating two chocolate bars instead of one. As one current bar isn’t satisfying. The two current bars are 60% more than one old sized bar. So 60% more calories and fat.

These people don’t just do this with one item of food, but with many more.

Have you ever considered that you are in fact, one of 'these people' that you constantly complain about?

Complainception.

 

[Haggisman]

Think the shrinkflation is partially responsible for the obesity problem. People are eating two chocolate bars instead of one. As one current bar isn’t satisfying. The two current bars are 60% more than one old sized bar. So 60% more calories and fat.

These people don’t just do this with one item of food, but with many more.

Nobody is forcing the fatties to eat 2 of them....

What annoys me is odd-sized packs of things. In particular the usual items you'd get for a kid's packed lunch at school. There are 5 days in the week, so don't put your ****ing drinks and biscuits in packs of 4, forcing me to have to buy 2 packs

 

[cheesefest]

Have you ever considered that you are in fact, one of 'these people' that you constantly complain about?

Complainception.

I’m about 3.5 stone overweight myself. Some is down to medication.

 

[Terminal_Boy]

Nobody is forcing the fatties to eat 2 of them....

What annoys me is odd-sized packs of things. In particular the usual items you'd get for a kid's packed lunch at school. There are 5 days in the week, so don't put your ****ing drinks and biscuits in packs of 4, forcing me to have to buy 2 packs

That’s been going on for decades as I remember Herself ranting about it on a weekly basis when packing up our two daughter’s lunches.

 

[Martynt74]

Drink bottles are increasingly unusual shapes, supposedly to make them look interesting, but in reality to hide their reducing volume.

I've stopped buying quite a few products now because I don't want to be taken for a mug.

I would have said drinks bottles were one of the few things where this didn't apply and the sizing was fairly standard (330ml/440ml/500ml) and it's the prices increases to adjust rather than trying to hold the price point down and reduce volume.

 

[fez]

"Please understand that we have 3 options, charge you more, give you less or make less money. We have decided that giving you less and charging you more is in the best interests of everyone"

 

[Jono8]

"Please understand that we have 3 options, charge you more, give you less or make less money. We have decided that giving you less and charging you more is in the best interests of everyone"

Accurate - although with most companies, the wouldn't even make less money...They...they just want more.

 

[Martynt74]

Accurate - although with most companies, the wouldn't even make less money...They...they just want more.

Rarely does it work like that though, look at someone like Pepsico, one of the biggest food/drink companies around and then look at their profit margins over the last 10+ years.



It's pretty damn static, so they're not actually really making more money, they're just keeping sales and costs in line (generally)

PepsiCo Profit Margin 2010-2023 | PEP

Current and historical gross margin, operating margin and net profit margin for PepsiCo (PEP) over the last 10 years. Profit margin can be defined as the percentage of revenue that a company retains as income after the deduction of expenses. PepsiCo net profit margin as of September 30, 2023...

www.macrotrends.net

 

[fez]

Accurate - although with most companies, the wouldn't even make less money...They...they just want more.

Well that is a core fundamental of capitalism. If you aren't increasing the stock price constantly then you need to be paying dividends or people won't want to invest because there is no investment potential there.

Its the fundamental weakness of capitalism. You can see it in so many companies. They hit their natural ceiling and perhaps have been vastly overvalued and suddenly projections aren't hit, growth has stalled and then they are in a pickle. Look at many of the streaming services. Disney is haemorrhaging money. Netflix is scrabbling to find a way to make more money and keep subscribers. Their business model is fundamentally flawed when it comes to infinite growth and yet that is what they all depend on.

 

[fez]

Rarely does it work like that though, look at someone like Pepsico, one of the biggest food/drink companies around and then look at their profit margins over the last 10+ years.



It's pretty damn static, so they're not actually really making more money, they're just keeping sales and costs in line (generally)

PepsiCo Profit Margin 2010-2023 | PEP

Current and historical gross margin, operating margin and net profit margin for PepsiCo (PEP) over the last 10 years. Profit margin can be defined as the percentage of revenue that a company retains as income after the deduction of expenses. PepsiCo net profit margin as of September 30, 2023...

www.macrotrends.net

All of these things are very narrow in their scope though. Amazon were losing huge sums for a very long time. In vs out is an overly simplistic metric. How have they expanded during that time? As a corporation you can very easily manipulate your profits by simply ploughing any money you make back into infrastructure that will grow the business.

A 10% profit margin on £10bn is nice. A 10% profit margin on £100bn is nicer.

If you could find a chart that showed cost of production vs retail price of their products over that period it would paint a more accurate picture of how they are passing their material costs onto the consumer.

 

[Martynt74]

If you could find a chart that showed cost of production vs retail price of their products over that period it would paint a more accurate picture of how they are passing their material costs onto the consumer.

So their Gross Margin? Literally just Gross Profit (Revenue - Cost of Sales) divided by Revenue



Again, it hovers around a couple percent.

 

[Haggisman]

That’s been going on for decades as I remember Herself ranting about it on a weekly basis when packing up our two daughter’s lunches.

Yes... it's the same as the age old "why do burgers come in packs of 4 and hot dogs in jars/tins of 8, when buns come in packs of 6?". Whoever decided this should be the case needs to have bamboo shoots put under their fingernails.

 

[413x]

I don't so much mind the shrink as the devious big packaging with small product.

Crisps are the worst offenders. Luckily I don't like crisps!

 

[jpaul]

"Please understand that we have 3 options,

well the government had an option for reducing advertising of obesity related products and their display .... thereby reducing NHS/economic costs .. but their lobbying friends pursuaded them to stall that legislation.

 

[413x]

Yes... it's the same as the age old "why do burgers come in packs of 4 and hot dogs in jars/tins of 8, when buns come in packs of 6?". Whoever decided this should be the case needs to have bamboo shoots put under their fingernails.

4 and 4 is the only one that easily lines up.
You do get sets of 4 buns.

Nice buns!

 

[fez]

So their Gross Margin? Literally just Gross Profit (Revenue - Cost of Sales) divided by Revenue



Again, it hovers around a couple percent.

Right so I run a business that charges £5 for my item. It costs me £2.50 to produce. Next year I charge £10 for my item but it costs me £5 to produce because I have bought a massive warehouse, hired loads of staff and can now churn out 3x the number of items. Same % profit on sales but I have pushed the cost of growing my business onto the customer so the % profit on sales is completely static but the cost to the customer has doubled. Thats fair because the net margin has stayed at the same figure?

 

[platinum87]

All of these things are very narrow in their scope though. Amazon were losing huge sums for a very long time. In vs out is an overly simplistic metric. How have they expanded during that time? As a corporation you can very easily manipulate your profits by simply ploughing any money you make back into infrastructure that will grow the business.

A 10% profit margin on £10bn is nice. A 10% profit margin on £100bn is nicer.

If you could find a chart that showed cost of production vs retail price of their products over that period it would paint a more accurate picture of how they are passing their material costs onto the consumer.

Amazon were not loosing money for a very long time, they have been profitable for the last 20 years.

Right so I run a business that charges £5 for my item. It costs me £2.50 to produce. Next year I charge £10 for my item but it costs me £5 to produce because I have bought a massive warehouse, hired loads of staff and can now churn out 3x the number of items. Same % profit on sales but I have pushed the cost of growing my business onto the customer so the % profit on sales is completely static but the cost to the customer has doubled. Thats fair because the net margin has stayed at the same figure?

The gross margin is the cost of production, not capital expenditures, in your example, the cost to produce would stil be £2.50, but you are selling it for £10, while you've incurred £2.50 in operating expenses

 

[fez]

The gross margin is the cost of production, not capital expenditures, in your example, the cost to produce would stil be £2.50, but you are selling it for £10, while you've incurred £2.50 in operating expenses

So you can't count the cost of new machinery, buildings, tooling, training, staffing in the costs of production?

 

[Martynt74]

So you can't count the cost of new machinery, buildings, tooling, training, staffing in the costs of production?

No, they would all be operating costs and apply against the Net Profit. Machinery would be depreciated which sits outside of production costs. Training/Staffing would be in Salary costs.

The only Salary costs would be directly attributable production workers (think Warehouse staff etc), but they'd likely be in line with the current ratios (eg 1 person makes 10 items, so if you double sales you'd need 2 people), the % margin would remain the same. Companies aren't just hiring people for the fun of it.