AB Inbev manufacturer of Coca-Cola and other well-known cool drink brands has introduced reduced size containers at the same price as the previous packaging to howls of rage from consumers and industry watchers.

In a recent snap online poll undertaken by the consumer website Retail Price Watch www.retailpricewatch.co.za  more than 90% of consumers surveyed felt that the latest shrinkflation to hit our stores was a rip-off

. Pepsi/Kingsley/Twissa here we come!!!

The anger seems to be centred around two things: Firstly the claim by Roger Gauntlett general manager of Coca-Cola South Africa that the new size was “intended to reduce consumers’ sugar intake” (the new 440ml bottle apparently contains the equivalent of 11 teaspoons of sugar instead of 13). This claim has been trashed on social media:

Roger Gauntlett is one of those business people who think his customers are stupid…

Where’s the sugar in Sprite Zero?

Secondly the new packaging which will replace the old completely in stores from November comes at the same price – a 14% hike.

Viccy Baker of Retail Price Watch says that Coca-Cola’s treatment of its customers is just one more example of large FMCG manufacturers – “Big Food” - riding roughshod over consumers simply because they can.

“Coca-Cola’s dominance in the marketplace is well-established. It has kept the price of its products artificially low for years, not out of consideration for its customers but in order to squeeze out smaller competitors, a remarkably successful strategy.   It obviously hoped by decreasing the size and maintaining the price, to slip under consumers’ radar in the run up to the holiday season.”

Baker believes that consumers should vote with their wallets.

 “Stop buying Coca-Cola for your children. A diluted fruit juice concentrate contains 2-3 teaspoons sugar as opposed to the 11 spoons in a 440ml Coke, and costs far less.

“Or make Coca-Cola a weekend treat for the whole family, instead of an everyday drink.”

“Reduced sales are the only way that Coca-Cola will pay any attention to consumers.”   

In 2016 independent consumer website Retail Price Watch conducted a survey of prices across South Africa’s seven biggest chains in four different categories. The items surveyed were national brands which were selected solely on the basis that they are available from all stores.

This year the comparison was slightly truncated because the same brands were not available at all stores: nevertheless the four “big name stores” are still represented.The chains were Checkers, Pick n Pay, Shoprite and Spar. The categories were baking ingredients, beverages, cereals and porridge, and staples.

The average price of each item in May from stores around the country was used in order to ensure that a single “special” did not unduly weight the overall price of the item.

Pick n Pay proved cheaper than the other three stores in all categories, although by a narrow margin in the Cereals and Porridge category, with less than one cent separating it from its nearest rival Checkers.

“It is noteworthy that only cereal and porridge prices appear to have stabilised or slightly reduced since July last year, while others continue to rise,” says Viccy Baker of Retail Price Watch.

Spar as the most expensive was 5.5% higher than Pick n Pay in the Baking Ingredients category and 5.1% more expensive in the Beverages category. Shoprite was the most expensive in the Cereals and Porridge category, with Pick n Pay beating it by 7.7%. In Staples, Spar came out an average 8.7% more expensive than Pick n Pay.

“This survey is not a basket of goods but it does present a rare opportunity to compare apples with apples, something stores and suppliers are very keen to prevent consumers from doing.

“For example, Cremora dropped its 1 kg pack (surveyed last year) for an 800g pack. The price appears to be lower yet if you adjust the price back to the kilogram price, you will find out that you are paying more per gram for the 800 gram pack than you were for the kilogram pack – “shrinkflation” in action!

“An objective price comparison also provides a reality check in demonstrating that prices move in a very narrow band and are similar over time, no matter which store you buy from. It’s up to consumers to demand value for money and not be taken in by so-called special offers (you have probably been paying more than the average for the special over the past few months so that it will appear as if the price has dropped). “

“All the dazzling technology, the big data and the sophisticated modeling  ….could not save American journalism from yet again being behind the story…”  

“Data is Dead”

Media commentators on the failure of the news media to predict a Donald Trump victory in the latest US Presidential elections.  

“This idiocy from a company based in a country that offers its electorate the choice of president between a liar and a bully.... Well done Mondelez you just don't get it do you... you've taken yet another confectionary (sic) icon and have trashed it.”  

A Facebook post after the manufacturers of Toblerone decided to reduce the size of its  iconic triangular product and increase the gaps between the chocolate triangles.  

Are South African FMCG retailers and manufacturers also guilty of “just not getting it” to the detriment of their relationships with customers?

Viccy Baker of Retail Price Watch, the consumer website which gives customers more choice when it comes to their purchase of household goods, believes that there is a profound disconnect between what customers expect from their brands and retailers, and what is being delivered.

“There is a plethora of research houses and an alphabet soup of acronyms and buzzwords serving the retail industry in this country.  

“Amidst all this noise the consumer’s trust in brands is rapidly disintegrating – and nobody seems to notice. Just three factual articles published by us in the online press about FMCG issues this year attracted 150 negative comments and fewer than five positive comments about retailers, from consumers.

“I think that there is outright profiteering going on with regard to food. Not to mention price fixing.”

“Let’s burn all the supermarkets.”

“So beware specials, very often the only special about them is that they are not special.”

“Bunch of scammers.”

There is general agreement that online comment on news stories represents the lowest level of communication. Nevertheless the simmering resentment that people feel against certain issues first rises to the surface here and on social media, and hard lessons have been learnt about ignoring it.  

 Baker cites recent examples of manufacturers and retailers riding roughshod over consumers.

“Bruce Whitfield spent more than five minutes berating Toblerone on the 702 Cape Talk Money Show last week, yet this is only one of more than 50 examples of “shrinkflation” recorded by our website over the past two years.  Toblerone is an exception in that it at least took the trouble to inform its customers of the impending changes. In most instances neither manufacturers nor retailers bother. The barcode remains the same despite the change in the product, directly against good retail practice.

“Pick n Pay Tuna for Cats jumped in one month from R9.99 to R17.99, an 80% increase with no apology or explanation. 

“Ritebrand Rooibos Tea 80 units sold by Shoprite, has increased in price by 54% since November last year, from an average of R18.19, to an average R27.99. This is shocking enough, considering that Rooibos tea is a 100% South African product. Yet 80 units of Lipton tea are now selling for an average R53.56, 106% more than November last year. No justification from the manufacturer or the stores, although Unilever declares it is “redefining” sustainable business practices and trying to keep jobs alive.

“Some Spar stores are now selling Snowflake flour 2.5kg for R32 a bag, and on average Spar’s cost of Snowflake is more than 23% higher than it was this time last year. Spar recently introduced a house brand canned mushrooms 285g tin. In fact the proportion of mushrooms in the can is 40% - meaning that the consumer is paying for 60% salt water!

“Woolworths, infamous in many people’s minds for its high prices, shows far greater consistency in its pricing. Presumably consumers are prepared to put up with high prices in return for a level of trust in this retailer.  

“In a basket of 20 national brands measured over a 3-month period this year, Woolworths changed the price of five products. Checkers changed the price of all 20 products, multiple times, as did Pick n Pay and Shoprite, with Spar close behind. Although some of the price movements were down, this often followed a steep hike (in one instance of 48%).

“Bewildered consumers now feel they enter these stores on the defensive, and the sight of merchandisers with long rolls of PI labels moving down the aisles fills them with a sense of panic.

“In contrast, when the price of sugar rose by 15%, Makro (not always blameless in its treatment of consumers) took the trouble to inform its customers well in advance so they could stock up before the price hike hit. This made good business sense for Makro and also put it into a favourable light with its customers.

Baker believes that loyalty programmes and specials have become ways for the consumer to feel he/she is “getting back” at the retailers, and are not in fact gaining greater brand loyalty.

“The researchers got it wrong when they dismissed Trump supporters as being un-American. Toblerone got it wrong by trying to cover a bitter pill with a sweet coating. There is a wave of civic action spreading throughout South Africa. Will it eventually reach the consumer sector?