Carrefour takes a stand against 'shrinkflation' with warning labels on products

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Carrefour takes a stand against 'shrinkflation' with warning labels on products
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Carrefour (EPA: CARR ), the second-largest grocer in France, has started placing warning labels on certain products in response to the ongoing issue of "shrinkflation," where manufacturers reduce package sizes but maintain the same prices. The move was initiated this week, in a bid to pressure companies to reconsider their pricing strategies.

The supermarket chain has identified 26 items that have shrunk in size without a corresponding decrease in price. These include products from food industry giants such as Nestle (NS: NEST ), PepsiCo, and Unilever (LON: ULVR ). Notably, Carrefour reported that Guigoz infant milk formula by Nestle had reduced from 900g to 830g per pack, a bottle of sugar-free peach-flavoured Lipton Ice Tea by PepsiCo had shrunk from 1.5 liters to 1.25 liters, and Viennetta ice cream by Unilever had decreased from 350g to 320g.

"Obviously, the aim in stigmatizing these products is to be able to tell manufacturers to rethink their pricing policy," said Stefen Bompais, director of client communications at Carrefour. The supermarket is highlighting the affected products with signs on the shelves reading: "This product has seen its volume/weight fall and the effective price charged by the supplier rise."

The manufacturers involved, including Unilever, Pepsico (NASDAQ: PEP ), and Nestle, have yet to comment on Carrefour's initiative.

The move comes amidst mounting pressure on French retailers and food manufacturers to reduce prices as consumers grapple with rising costs. In June, French Finance Minister Bruno Le Maire summoned 75 retailers and consumer groups for a meeting about prices and accused manufacturers of not adhering to inflation guidelines.

However, retail expert Ged Futter suggests it's unlikely that UK supermarkets would emulate Carrefour's strategy due to the potential for strained relations between retailers and food firms. He pointed out that supermarkets often employ similar "shrinkflation" tactics with their own-label products, aiming to maintain a specific price point by using cheaper ingredients or reducing portion sizes.

A spokesperson for Lindt & Sprüngli, another brand identified by Carrefour for shrinking its products, said its prices had increased on average by about 9.3% in line with rising raw material costs. However, they also asserted that the company always complies with labeling laws and regulations, ensuring consumers have accurate and objective information about the amount of product they are purchasing.

Carrefour's stance against 'shrinkflation' is a significant move as it is one of the world's largest grocery chains. The labels have been introduced amid reports of falling costs and increasing profits for food manufacturers, suggesting that they may be exploiting concerns over inflation to increase their margins.

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