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

Network Ten Creditors Approve CBS Deal
  • Media

Network Ten Creditors Approve CBS Deal

It seems the fight for Ten between CBS and media moguls Lachlan Murdoch and Bruce Gordon may finally be over.

by B&T Magazine

B&T Magazine
MKTG Signs Exclusive Commercial Partnership With PlayersVoice
  • Marketing
  • Media

MKTG Signs Exclusive Commercial Partnership With PlayersVoice

MKTG has announced it has signed an exclusive commercial partnership with newly-launched sports storytelling site PlayersVoice.com.au – an agreement that will see the agency move into a new territory of sports marketing. The partnership between MKTG and PlayersVoice will see the business managing brand partnership opportunities for the new platform; working with clients to deliver […]

Domo Introduces New Data Security Software Solution
  • Marketing
  • Technology

Domo Introduces New Data Security Software Solution

Domo has announced it has introduced new cloud security technology for its Bring Your Own Key (BYOK) software, which includes unique capabilities like rolling generation of data encryption keys and a built-in kill switch. Domo BYOK is the first BYOK enterprise software solution for cloud analytics and business intelligence, and builds on the company’s existing security, compliance and […]

Shopper Media Group Grows Sydney & Melbourne Sales Teams
  • Advertising
  • Marketing
  • Media

Shopper Media Group Grows Sydney & Melbourne Sales Teams

Shopper Media Group (SMG) has continued to grow its Sydney and Melbourne sales teams to keep up with the demand for Smartlite Panels for shopping centres. Ashley Munro joins SMG as group sales manager for Sydney, having previously worked in a similar role at NOVA Entertainment. Laura Mason has been appointed as SMG’s business manager […]

RIO DE JANEIRO, BRAZIL - AUGUST 14:  Usain Bolt of Jamaica competes in the Men's 100 meter semifinal on Day 9 of the Rio 2016 Olympic Games at the Olympic Stadium on August 14, 2016 in Rio de Janeiro, Brazil.  (Photo by Cameron Spencer/Getty Images)
  • Advertising
  • Media

Olympics, Census Prove Tough Hurdles For Media Agencies: SMI

Australia’s media agency market has experienced another tough month in August, according to the latest data by Standard Media Index (SMI). SMI noted the softer demand this time around was primarily due to the Rio Olympics and Census providing abnormal bookings last year, resulting in demand for August 2017 so far being back 12.1 per […]

The Monkeys Takes Over From M&C Saatchi On NRMA’s Creative Account
  • Advertising

The Monkeys Takes Over From M&C Saatchi On NRMA’s Creative Account

Accenture-owned agency The Monkeys has bolstered its client ranks, having been chosen to handle the creative for the NRMA. The Monkeys CEO Paul Green confirmed to B&T that the agency had been appointed to the NRMA account by parent company IAG, which also includes brands CGU and Swann Insurance. M&C Saatchi was the incumbent creative […]

by B&T Magazine

B&T Magazine
A waitress carries beer mugs in the Hofbraeuhaus tent after the opening of the famous Bavarian
  • Marketing

Study: Why No Or Low Alcohol Beers Are Fast Becoming Drinking’s “New Cool”

New research from global market intelligence agency Mintel reveals that over a quarter of consumers in France (28 per cent) and Germany (27 per cent ) agree that low (under 3.5 per cent) or no alcohol beer tastes just as good as full-strength beer. And while younger consumers may have been the most enthusiastic drinkers in previous generations, […]

Engine Group Encourages Queenslanders To ‘Go Local’ In New TVC For State Govt
  • Advertising
  • Campaigns

Engine Group Encourages Queenslanders To ‘Go Local’ In New TVC For State Govt

Brisbane creative agency Engine Group has launched an integrated campaign for the Queensland government promoting the benefits of buying locally and supporting local small businesses. The ‘Go Local, Grow Local’ social marketing campaign celebrates small businesses across Queensland and highlights that small businesses are the lifeblood to growth in local communities. Central to the new […]

Sam Weir, Editor - The Advertiser & AdelaideNow 
 Editorial 
 
 Picture: Turner Matt
  • Media

News Corp Appoints New Editor For The Courier-Mail

News Corp Australia has announced the appointment of Sam Weir (pictured above) as editor of Queensland’s The Courier-Mail. Weir is one of Australia’s most accomplished editors, having edited the Perth Sunday Times and for the last four-and-a-half years, The Advertiser in Adelaide. News Corp Australasia executive chairman Michael Miller said: “I am delighted Sam has […]

Is This The Creepiest Ice-Cream Ad Ever?
  • Campaigns

Is This The Creepiest Ice-Cream Ad Ever?

Look, a terrifying ice-cream ad! And by "terrifying" we really mean Tony Abbott in his sluggos kind of "terrifying".

by B&T Magazine

B&T Magazine
Creatives, Step Up To The CX Plate!
  • Marketing
  • Opinion

Creatives, Step Up To The CX Plate!

Aussie creatives urged to step up to the CX plate! That's the Adobe boss saying it; like B&T would never say try harder.

Opinion

by B&T Magazine

B&T Magazine
InMobi’s Anne Frisbie On Ad Fraud
  • Advertising

InMobi’s Anne Frisbie On Ad Fraud

B&T sat down for a chinwag with InMobi’s Anne Frisbie who thought only half of our questions were poor & unresearched.

by B&T Magazine

B&T Magazine
Facebook Provides More Clarity & Control For Brands
  • Advertising
  • Media

Facebook Provides More Clarity & Control For Brands

Facebook has announced it is taking action to provide more clarity and controls for advertisers. The updates include: Third-party verification Facebook is seeking accreditation from the Media Ratings Council and set a timeline of 18 months to audit, review and accredit Facebook measurement across three key areas: first-party served ad impression reporting; third-party viewability partner […]

Ogilvy Duo To lead Miami Ad School’s 2017 Social Media Boot Camp
  • Advertising

Ogilvy Duo To lead Miami Ad School’s 2017 Social Media Boot Camp

Miami Ad School has announced that Ogilvy’s Alex Watts (head of social) and Jennifer Ngai (lead social strategist), will lead its Social Media Boot Camp in the coming spring term. The 10-week boot camp is an intensive program where students work on live briefs to create fully-executed social media campaigns, and will run from Monday […]

Kim Portrate Calls For Review Of Viewability Standard For Video Ads
  • Marketing
  • Media

Kim Portrate Calls For Review Of Viewability Standard For Video Ads

Kim Portrate, chief executive of ThinkTV, has welcomed a call today by the renowned marketing science academic Professor Karen Nelson-Field for the global advertising industry to review the current MRC viewability standard for video advertising. Speaking at ReThinkTV in Sydney, Portrate said: “Last year we asked Karen to help us understand how TV works. We […]

Streetfighter Media Adds ‘Lettered’, Choreographed Teams To Its Guerilla Marketing Offering
  • Marketing

Streetfighter Media Adds ‘Lettered’, Choreographed Teams To Its Guerilla Marketing Offering

Guerilla marketing company Streetfighter Media has launched what it claims is a world-first offering for marketers. Lettermen is people wearing letters, walking around town and pulling some choreographed moves. They spin, dance, jump, strut around and spell the word like a Mexican wave. A full range of letters and numbers are available with multiples, along […]

Outdoor Player goa Offers Charities To Win Share Of $1m Worth Of Media Space
  • Advertising
  • Media

Outdoor Player goa Offers Charities To Win Share Of $1m Worth Of Media Space

Queensland outdoor media provider goa is once again welcoming applications from community organisations far and wide looking to share their message with South East Queensland via THE goa GRID and THE ICONIC SERIES. Each year, goa chooses a number of community organisations through their Community Partnership Program to partner with and share in a whopping […]

Macpac Chooses Tryzens To Be Its E-commerce Delivery Partner
  • Marketing

Macpac Chooses Tryzens To Be Its E-commerce Delivery Partner

Outdoor apparel and equipment brand Macpac has announced it has selected Tryzens as its e-commerce delivery partner. Tryzens will help Macpac leverage capabilities of the Salesforce Commerce Cloud platform to deliver an enhanced customer experience and provide a robust, scalable platform for international expansion. Mark Jagger, digital marketing manager at Macpac, said: “e-commerce represents a […]

How The New iPhone 8 And NFC Will Change Customer Experience
  • Marketing
  • Opinion
  • Technology

How The New iPhone 8 And NFC Will Change Customer Experience

In this guest post, Geronimo CEO Matt Hunt (pictured below), explains how ‘The Apple Effect’ will complete the ecosystem for NFC marketing. ‘The Apple Effect’: up to 90 per cent of smartphones could be interacting with the physical world through NFC. The same smartphone technology that allows you to use Apple Pay is now going to be […]

Opinion

by B&T Magazine

B&T Magazine
Instagram Introduces Updates To Its Stories Feature
  • Media

Instagram Introduces Updates To Its Stories Feature

Instagram has announced two significant updates to Instagram Stories that will allow users to share stories via Direct and helps brands to create original content for Ads in Stories. The first update will allow users to share stories via Direct, which will make sharing a story as easy as sharing a post from your feed. […]