Dive Brief:

• The United Kingdom's Office of National Statistics (ONS) reports that more than 2,500 products — many of which are candies — have shrunk in size since 2012, though prices have remained the same or higher, Supply Management reported Monday.
• Manufacturers are allegedly blaming the alleged "shrinkflation" on rising sugar and cocoa prices, though neither are currently suffering a scarcity. In fact, sugar and cocoa prices are at their lowest points since January 2012, according to the report.
• The ONS further states that in the category of “sugar, jam, syrups, chocolate and confectionery” shrinking package sizes contributed 1.22% to the category's price inflation since 2012.

Dive Insight:

Shrinkflation — a packaging phenomenon — highlights the challenges of pricing and space management in the CPG supply chain. 

Packaging decisions are inevitably a supply chain issue, as retailers and manufacturers must communicate on price and consumer preferences. The value of packaging appeal, particularly as relates to food and food impulse purchases, is extreme. Variety too plays a role in attracting customers, especially the largest group of candy consumers: children.

Yet, consumer prices are not always related to a manufacturers' actions. Consumer packaged goods (CPG) makers often include a recommended retail price of their products, which can be altered by the store. And stores have a variety of factors to consider when altering prices, including shelf space and inventory availability.

Space is often limited in the narrow aisles leading to checkout, where most groceries stock a bulk of their candy supply, especially as new blends and product variations continue emerging. A Milky Way was previously available in one style and one size; but now there is Milky Way Dark, in regular or giant size. The same is true of Chunky candy bars, and most other brands: each is new, improved, or simply "recharged," which is more than enough to appeal to most sweets lovers.

Therefore, while reduced size could be an attempt at making more while offering less, it's likely that in the competition for shelf space coupled with the need to offer a maximum of variety, smaller sizes are a better way to guarantee placement. Plus, a smaller sized York Peppermint Patty also means that more can fit within the allotted space, which results in a reduced need for product restock.

The responsibility for shrinkflation, then, extends across various actors: when faced with the choice of lowering prices, the manufacturer and retailer must both make the choice to pass on cost savings to their buyers.