You go to the store and want to buy your favorite 200-gram pack of butter. But wait: there are only 185 grams left in the package, although the price is the same. This is the way consumers are being tricked out of their money.
Cans become smaller, price goes up: covert price rise in Estonia’s shops
The people who spoke to Postimees confirmed in one voice: of course, the prices in the stores have gone up. And they often try to present the price rise to the customer in a way which makes it very difficult to be noticed. One of the respondents mentioned his last store experience: two packs of cheese of the same manufacturer side by side, one pack of 300 grams, the other of 500 grams. At first, he wanted to take the bigger package and save money, but then he looked at the price per kilogram – and the cheese in the smaller package turned out to be cheaper when bought by kilogram.
There is also something wrong with the packages – they tend to shrink. One salad lover complained that he had been constantly buying 380-gram canned salads, but now the can has changed to 280-gram. The price on the jar is of course the same, only the price per kilogram has changed: the salad used to cost 4.97 euros per kilogram, now it is 5.68 euros.
It is difficult to say how common this kind of packaging shrinkage is; no one has good statistics. Rimi Estonia's purchasing manager Talis Raak stated that this tendency cannot be considered widespread in their stores. “Some individual changes of packages have happened, of course. The reasons for this differ, for example, the packaging of product lines is standardized or production lines are replaced, which is why the weight of the packaging also changes. In addition, they certainly monitor consumption and in certain cases smaller packaging may be better to prevent wasting of food. The price of the product certainly plays a role as well: the manufacturers are currently trying to make it more affordable for the consumer,” Raak said.
Roomet Sõrmus, chairman of the board of the Estonian Chamber of Commerce and Agriculture, also talks about the magic of the unit price. “In the current economic situation, the unit price of a product is a not insignificant matter in competition; which is why manufacturers have to bring smaller packages to the market as well. When choosing food in the store, it is wise to look at the price per kilogram or liter instead of the unit price of the product, because that way you can get a much better idea of how much the product actually costs, and it gives you a better chance to compare it with other similar products,” Sõrmus recommended. According to him, the rule of thumb is that the kilogram price of a small package is higher, but the opposite might also be true. “On the other hand, smaller packaging sometimes helps to reduce general waste of food, which is quite a big problem in Estonia."
Manufacturers do not want to hear anything about the shrinking packaged; Sirje Potisepp, head of the Estonian Food Industry Union, was critical of the consumers' point of view. “Regarding packages, changes are still taking place in two directions, larger, the so-called family packages are also being sold, which are often more favored in other countries, especially due to their lower price and larger quantities. However, for some reason, they always notice and point out that the packages are getting smaller,” Potisepp said.
According to Potisepp, the shrinking of packages has three aspects. “First of all, the recommendations of health promoters and the wish of increasing number of single people for the packages to be smaller. On the other hand, changes are often made dependent on which packages are available. Finally, a smaller quantity is also cheaper, and this aspect, the price of food, is increasingly becoming a criterion for selection; therefore producers are also looking for ways to offer a slightly lower price in extremely fast and sudden price increases. Therefore, this is not a matter of deliberately deceiving the consumer, but rather of considering the consumers’ interests and, in addition, the problems of the availability of packaging for producers," said Potisepp.
Price rise hits hardest the poor
In other words, the shrinking of packages at the same price means the following: if people do not have money to buy a kilogram of carrots, they will start buying half a kilogram, but at the price of a whole kilo.
Price increase in Estonian stores has been immense. If in recent months people keep talking about a twenty-percent price increase, going back in time a bit reveals the whole problem of Estonia. Based on Postimees shopping basket survey from April 2020, it can be said that at that time a person could get the necessary food supply from the cheapest store for 35.64 euros and from the most expensive one for 46.63 euros. In September of this year, the same shopping basket cost 60.41 euros in the cheapest store and 64.05 euros in the most expensive one. It should be borne in mind that campaigns might have distorted the study results because the cheapest product of each category currently on sale was selected for the shopping cart.
The sharp end of the price increase therefore hit primarily those who are already looking for an affordable price: for them, the price of the grocery basket increased by nearly 70 percent in two years, while the price increase of the shopping basket in the more expensive stores remained at 37 percent.
Triin Merilyn Varatalu, manager of the sales and marketing department of dairy firm Estover, could swear that none of Estover's products has experienced such shrinkage for at least a few years. “The consumers are now probably significantly more sensitive to any price increases and changes than usual. We have had a 450-gram package of Eesti Juust cheese since the beginning. Sliced Hiirte Juust cheese is also still available in a 500-gram package, but recently there was a campaign in one store chain where we sold the same cheese exceptionally in a 450-gram package. The usual half-kilogram package has not disappeared anywhere,” said Varatalu.
At the same time, Varatalu recognizes the need for price increases. “In a situation where all raw materials and input costs, led by the increase in energy price, are causing unprecedented cost price increases for producers, it is not possible to keep the retail prices of products at the same level. Starting from a certain limit, the price becomes unacceptable for retail chains and buyers, and therefore it may be more reasonable to reduce the package size and keep the price the same. Either way, price increases unfortunately cannot be postponed at present. We currently have no plans to reduce the volume of packages but we cannot rule it out either.”
However, the merchants and the food producers agree on one thing: people are running out of money. “We clearly see a decrease in purchasing power, because the main part of families' income is spent on the three basic needs, which are food and drink, transport costs and housing costs. If the housing costs become much higher than in the spring, the people's lives will become even more difficult and the food preferences will increasingly depend on the price, because one has to pay housing costs and has to travel somehow. Therefore, savings are sought both in food and in other services. Previous crises have shown this, and we must be ready for it. We shall probably face a very hard autumn and winter,” Potisepp said.