Why Brands Who Reduce Portion Sizes & Not Prices Are Asking For BIG Trouble

Why Brands Who Reduce Portion Sizes & Not Prices Are Asking For BIG Trouble
SHARE
THIS



In this opinion piece, the creative director of GMG Digital, John Isaac (pictured below), argues FMCGs who sneakily decrease the portion sizes without reducing the price could be in for a nasty backlash from customers…

Why have so many FMCG brands decided to slash portion sizes but not prices? As consumers, don’t we find this to be a major concern? We are expected to pay the same prices, for less product and in some cases, for an inferior tasting product. Shouldn’t such companies look to create new products (or improved versions) to satisfy customers yet still meet their financial demands? Innovation surely is key.

1441432_1396374627267286_2120991800_n

This article came about after witnessing a few media stories recently where customers complained about the portion size of their favourite confectionery being reduced yet the prices had remained the same. (Cue serious looking investigative current affairs reporter looking for answers).

Cadbury, Australia’s biggest chocolate player, blamed increasing ingredient prices and packaging costs. They reduced the sizes of favourites including Freddo Frogs and the Family blocks yet reported a 46% profit increase in 2013 ($127 million). Interestingly, Tony Abbott promised some $16 million in funding to the Tasmanian based Cadbury manufacturing plant in 2013. You would think some of that $127 million profit could be injected into the business if it were suffering. After all, the Tasmanian based factory churns out some 80 million family blocks each year.

It’s interesting that in December 2014, Frito-Lay, maker of Twisties, Burger Rings, Sakata, Nobbys Nuts and Smith’s chips, announced a 47% profit increase (Frito-Lay itself is owned by PepsiCo) yet now, in July 2015, they are announcing a reduction of packet sizes of Smith’s crinkle cut chips and Doritos corn chips by 5g, yet maintaining the same prices. In 2010, the pack sizes were 200g, now they are 170g. The company blamed local manufacturing cost pressures.

The brands of course have defended the bad news by claiming their wholesale prices won’t change but it’s the retailers who in fact determine the retail prices. How things would have been different if the Gobbledok was still with us…

List of recent portion size reduction:

  • Doritos – 175g to 170g
  • Smith’s crinkle cut chips – 175g to 170g
  • Red Rock Deli chips – 185g to 165g (2014)
  • Tasty Toobs – 125g to 110g
  • Cadbury Freddo Frog – 15g to 12g (20g in 2013)
  • Cadbury family blocks – 220g to 200g
  • Cadbury Roses – 753g to 729g (25% smaller than in 2011)
  • Cadbury Crème Egg – 5% smaller and recipe change
  • Nestle (Allens) Killer Pythons – 47g to 24g
  • Smarties – reduced by 20%

So, how should such FMCG brands innovate? Well, I don’t claim to have all the answers but perhaps a packaging redesign exercise to a cost-effective solution would be a good start. Companies claim packaging costs are increasing, so why not analyse the root of the problem first and go from there.

Secondly, how about exploring slight changes to ingredients. Companies also claimed ingredients and local produce costs are rising. Earlier this year, we noticed a slight change in the taste and texture of our office favourite, Arnotts Cheds biscuits. We took to Arnotts’ Facebook page to find out what was going on. Arnotts were courteous enough to reply and tell us they had tested various new ingredients and some consumers may notice a slight taste change. Makes sense. Instead of completely taking a consumer favourite off the shelves, refine the ingredients. We also noticed the package design had also changed slightly. You may experience a few disgruntled consumers but the overall impact should be minimal.

Thirdly, can we have some new products please? Sure the family favourites were great in the 70s, 80s and 90s but now that you’re telling us technology has changed and costs are rising, why not create products which meet the demands of today’s belt-tightening consumer world? Aldi have done a great job of introducing their confectionery products to the Australian market. Brand loyalty should always be questioned.

(In my opinion, taking a Crunchie bar for example and turning it into a family block isn’t exactly innovation. It’s just cheating.)

Many consumers have made the switch to Aldi brands after discovering great tasting products at a lower price. Double Time over KitKat? Always!

Fourthly (please bear with me on this one). Take a look at some online clothing retailers. They have a few storage warehouses where they ship their products to consumers. Lower overheads (little to no rent and power bills) and decreased physical store maintenance allows companies to focus on delivering a convenient digital experience. The online FMCG industry is still in its infancy especially in Australia. Would it be possible to have a brand such as Cadbury let’s say, one day stocking its products online instead of in supermarkets? Think about it for a second. Fewer products would need to actually be shipped to supermarkets, equating in lower packaging costs, lower freight costs, no need for in-store branding and merchandising. Also, what happens to all of the current stock which expires while gathering dust on a store shelf? Now yes there is a downside of course and I’m sure supermarket bosses would have me burned at the stake for even suggesting such a concept, but in a world of increasing manufacturing costs, factories will have no choice but to slash jobs and eventually cease production.

This is definitely suitable for companies like Kogan Pantry or Grocery Run.

I can’t remember the last time I walked into a physical store to buy a shirt or pair of shoes. Think ASOS.

I’ve seen quite a number of startups in the U.S. recently (such as Sprig, Munchery, OpenTable and Instacart to mention a few) focusing on disrupting the food/grocery delivery and restaurant experience. Such companies focus on creating a product which ‘delivers’ a great experience to ensure customers keep coming back. Food is accessible in most places during our daily lives but these startups understand it’s all about convenience and value for money. So instead of walking to my local supermarket for poor quality produce or less chocolate for my dollar, why wouldn’t I pay for a convenient digital service built purely around me and what I like?

We’ve experienced companies like GM Holden and Ford shut down manufacturing plants, leaving many without jobs. It will be a shame if the same thing happens to Australian based FMCG brands too. Such iconic brands are a part of the Australian fabric and bring back so many great memories. Needless to say, losing such icons would be a disaster.

John Isaac is the Creative Director at GMG Digital. You can connect with John at LinkedIn.

Please login with linkedin to comment

Latest News

Study: TV Ads Outperform Facebook & YouTube For Sales Impact, Regardless Of Screen Type
  • Advertising
  • Media

Study: TV Ads Outperform Facebook & YouTube For Sales Impact, Regardless Of Screen Type

New research from respected marketing science academic professor Karen Nelson-Field has uncovered new insights into how and why video advertising works for brands when viewed on mobile devices. The mobile edition of Nelson-Field’s ongoing Benchmark Series, commissioned by ThinkTV, makes a number of significant findings that are designed to help advertisers and their agencies get […]

Now Screen Repositions Organic Care Brand With New Campaign
  • Advertising
  • Campaigns

Now Screen Repositions Organic Care Brand With New Campaign

Aussie agency Now Screen has teamed up with Organic Care to reposition the brand in what has become one of the most competitive FMCG spaces. The new campaign, ‘Caring Comes Naturally’, celebrates what Organic Care has created since its inception: products that are as good for your body as they are for the environment. In […]

Can You Speak Data?
  • Marketing
  • Opinion

Can You Speak Data?

We're certainly fluent in gibberish, balderdash and claptrap here at B&T, but sadly data isn't part of the lexicon.

Opinion

by B&T Magazine

B&T Magazine
Social Change Maker Profile: Emma Heath
  • Advertising
  • Marketing
  • Media

Social Change Maker Profile: Emma Heath

B&T has partnered with UnLtd to showcase industry heroes! Well, it's arguably more heroine in the case of Emma Heath.

by B&T Magazine

B&T Magazine
Ad Fraud: A Problem We Can Solve
  • Advertising
  • Opinion
  • Technology

Ad Fraud: A Problem We Can Solve

Unlike B&T's mystery office farter, this columnist argues ad fraud is a problem that can possibly be solved.

Opinion

by B&T Magazine

B&T Magazine
Why We Pivoted Our ‘Specialist’ Agency Five Times In 15 Years
  • Marketing
  • Opinion

Why We Pivoted Our ‘Specialist’ Agency Five Times In 15 Years

In this opinion piece, Gavin McDonough (pictured above, co-founder and managing partner of Urban, shares through his own experience some valuable advice for independent specialist agencies. In November 2017, my brother Ryan and I celebrated 15 years in business. We started business out of my front room in Melbourne in 2002 – not with any grand […]

Opinion

by B&T Magazine

B&T Magazine
W+K’s Susan Hoffman Chosen As 39th AWARD Awards Chair Of Judges
  • Advertising

W+K’s Susan Hoffman Chosen As 39th AWARD Awards Chair Of Judges

Susan Hoffman, co-chief creative officer at Wieden+Kennedy (W+K), has been appointed chair of judges for the 39th AWARD Awards. Known to challenge the status quo, Hoffman is behind some of W+K’s most memorable and game-changing ads, including Nike’s ‘Revolution’, Old Spice’s ‘The Man Your Man Could Smell Like’ and Chrysler’s Super Bowl spots starring Eminem and Clint […]

Experiential Agency Kreate Gets Bought Out By Staffers
  • Marketing

Experiential Agency Kreate Gets Bought Out By Staffers

Leading experiential marketing agency, Kreate Australia is embarking on an exciting growth strategy following its purchase by three of the agency’s existing management team from its UK founder, Steve Evans.

Hurry! B&T 30 Under 30 Entries Closing Friday!
  • Advertising
  • Marketing
  • Media

Hurry! B&T 30 Under 30 Entries Closing Friday!

This is a clarion call for B&T 30 Under 30 entries, although it's probably more mariachi band than angelic harbinger.

by B&T Magazine

B&T Magazine
The Hit Network Chooses Comedian Tanya Hennessy To Host Weekend Breakfast
  • Media

The Hit Network Chooses Comedian Tanya Hennessy To Host Weekend Breakfast

Southern Cross Austereo’s Hit Network has announced that rising radio star and comedian Tanya Hennessy will take over hosting duties for its weekend breakfast slot in 2018. Hennessy will bring content to the airwaves each Saturday and Sunday morning from 7am to 9am with a regular rotation of guest co-hosts. The self-described talker, not walker […]

Straight Up PR Wins Five New Clients
  • Marketing

Straight Up PR Wins Five New Clients

Health, wellbeing and lifestyle PR agency Straight Up PR has welcomed Changing Habits, Unichi Wellness, enerGi, SleepX, and Healthie Hampers to its client portfolio. Straight Up PR’s projects will include bespoke PR services and influencer marketing packages specifically focusing on communications strategy and execution, media and influencer relations, PR launch events, product seeding and gifting, […]

March One Creates ‘Cheese For Change’ Fundraising Campaign For White Ribbon Australia
  • Advertising
  • Campaigns
  • Marketing

March One Creates ‘Cheese For Change’ Fundraising Campaign For White Ribbon Australia

Independent creative agency March One has developed a new fundraising event for White Ribbon Australia that turns a social moment into a social movement. Starting on Thursday 22 March and going until Sunday 25 March, Cheese for Change will ask Aussies to create a cheese platter that matters by gathering friends, family or co-workers together […]

Sixth Annual IGN Select Awards Winners Announced
  • Marketing

Sixth Annual IGN Select Awards Winners Announced

The winners of IGN Australia’s sixth annual Select Awards were revealed during a huge special event at the Australian National Maritime Museum in Sydney on Friday, February 16. Some 225 Media & Game Publishers alongside 320 IGN Community Gamers attended the annual event. 2017 was absolutely crammed with terrific games and several categories were extremely tightly-contested. The top […]

Meet Your Mentors For B&T Bootcamp 2018!
  • Advertising
  • Marketing
  • Media

Meet Your Mentors For B&T Bootcamp 2018!

When it comes to an industry "who's who", you'll find there won't be too much who-ing with this impressionable lot.

by B&T Magazine

B&T Magazine
ANZ Unveils Its 2018 GAYTMs
  • Marketing

ANZ Unveils Its 2018 GAYTMs

Mardi Gras is only weeks away and B&T has already hoisted the mirror ball and donned the hotpants to bring you this.

International Creative Services Redesigns Business Model To Broaden Talent Offering
  • Advertising
  • Marketing
  • Media

International Creative Services Redesigns Business Model To Broaden Talent Offering

Marketing consultancy International Creative Services has announced a new roster of diverse creative and production talent to provide a fully integrated solution for advertising and branded content. The roster includes a broad range of global and local directors, animators, illustrators, motion designers, visual artists, light projectionists, photographers and cinematographers – many of whom Australia will […]