Americans are now paying US$741 more per year to buy the same basket of groceries they bought in 2020 — and most of them have no idea why. Shrinkflation, the practice of reducing pack weight or volume while holding or lifting the retail price, has been quietly eroding real purchasing power in ways that headline CPI figures simply do not capture.
Research from InvestorsObserver tracked the prices and weights of products that American households continue to purchase regularly, including Frosted Flakes, Doritos, Coca-Cola, Campbell’s soup, and M&M’s. The findings confirm what consumer advocates have long argued: brand names stayed the same, but the value inside the packet did not.
For FMCG professionals in Australia, this data is not a distant American curiosity. The mechanics exposed in the report — two-step pricing, format fragmentation, and the asymmetry between price recovery and size recovery — are directly relevant to how local brands manage margin pressure, retailer negotiations, and shopper trust.
What Is Shrinkflation and Why It Matters for FMCG
Shrinkflation occurs when a manufacturer reduces pack weight or volume without a corresponding reduction in retail price. From a shelf-economics perspective, it is a pricing lever that sits largely outside the standard price negotiation between supplier and retailer — and well outside the average shopper’s line of sight.
The practice gained significant traction globally as input cost pressures mounted from 2021 onwards. In Australia, the Australian Competition and Consumer Commission (ACCC) has noted growing consumer concern about value perception in grocery, and the issue has surfaced in Senate inquiries into supermarket pricing conduct.
The InvestorsObserver research is significant because it quantifies cumulative impact over six years. That is a timeframe long enough to reveal not just isolated incidents, but a systemic pattern across some of the world’s most recognised FMCG brands.
Shrinkflation Research Puts Named Brands and Hard Numbers on the Record
Coca-Cola’s two-litre bottle rose from US$1.89 to US$2.79 over the study period. A 12-can pack climbed from US$4.89 to US$8.89. In January, Coca-Cola expanded mini cans nationwide and described the move as “portion innovation” — a framing that InvestorsObserver’s senior analyst Sam Bourgi challenged directly.
“The simplest advice we can give any Coca-Cola drinker right now is to buy the 2-litre. Our data shows it’s the best value format by a wide margin, and that gap has only grown since 2020. The mini can costs more than twice as much per sip. Most people had no idea,” Bourgi said.
M&M’s recorded a 102 per cent increase in price per ounce over the six-year period. Doritos and Frosted Flakes both followed a two-step approach — price increases first, pack size reductions second. By contrast, Ben & Jerry’s, Breyers, and Häagen-Dazs raised prices without reducing sizes at all. “That matters because it proves the shrinkflation strategy was a choice, not a necessity,” Bourgi said.
| Brand | Strategy | Price Movement | Pack Size Change |
|---|---|---|---|
| Coca-Cola (2L) | Price increase | US$1.89 → US$2.79 | No change |
| Coca-Cola (12-can) | Price increase | US$4.89 → US$8.89 | No change |
| M&M’s | Two-step | +102% per ounce | Reduced |
| Doritos | Two-step | Increased | Reduced after price rise |
| Frosted Flakes | Two-step | Increased | Smaller boxes post-increase |
| Ben & Jerry’s | Price only | Increased | No change |
| Skittles | Price only | Increased | No change |
How the Two-Step Strategy Quietly Compounds Margin Gains
The two-step pattern is commercially significant and worth understanding at a structural level. By raising prices first, brands condition consumers to accept a new price anchor. A subsequent pack size reduction then restores additional margin — but because shoppers are already anchored to the higher price, the volume change registers as far less of a shock than a second price increase would have.
What I find most striking in the data is what happened after the inflationary period subsided. By the latter stages of the study, most prices had stopped rising and held steady, with a small number recording modest declines. But not one brand restored its previous pack size. Products reduced between 2022 and 2024 remained at their smaller volumes permanently.
This is the structural asymmetry at the heart of shrinkflation: retail prices compress modestly on the way down, but pack sizes never recover.
What This Data Does Not Settle for Australian Operators
The InvestorsObserver research covers US market conditions, and its price figures do not translate directly to Australian supermarket shelves. Coles, Woolworths, and Aldi operate under different promotional mechanics, unit pricing requirements, and supplier agreements than US chains.
Australia’s mandatory unit pricing regulations — requiring retailers to display cost per 100g or per litre at shelf — give shoppers more transparency than most US retail environments provide. That structural advantage does not eliminate shrinkflation risk locally, but it does reduce the information gap that makes the strategy most effective.
The report also does not cover retailer own-label products, where pack size and pricing decisions follow entirely different commercial logic.
Who Notices — and Who Walks Away from the Shelf
The generational split in the data carries direct implications for brand managers. Baby boomers identified shrinkflation in 70 per cent of surveyed cases, compared with 48 per cent for Gen Z. However, Gen Z reported the highest rate of purchase abandonment — 80 per cent said they stopped buying a product after detecting it had shrunk. For brands targeting younger consumers with premium or value positioning, that combination of lower detection but higher defection is a material commercial risk that category reviews should price in.
Shrinkflation Is Now a Documented Trend, Not a Consumer Suspicion
The broader pattern this research confirms is that shrinkflation has crossed from anecdote into traceable, longitudinal data. As third-party organisations publish more price-and-weight tracking over time, the information asymmetry that made the strategy commercially safe begins to close. Regulatory scrutiny tends to follow data, not complaints.
For Australian brand managers and category buyers, the strategic question is not simply whether shrinkflation is occurring locally — it is whether current pack architectures can withstand the same level of public documentation that US brands are now facing. If you are managing a brand that reduced net weight between 2022 and 2024 without a corresponding price adjustment downward, it is worth auditing that position before a consumer group, a Senate committee, or a retail buyer does it for you. The data trail is getting longer, and it does not forget.
Brands that held the line on pack size during the cost squeeze — as Ben & Jerry’s and Skittles did — now have a defensible value narrative that their two-step competitors cannot easily replicate.