What is "Shrinkflation"?
Shrinkflation is a commercial practice which consists of
reducing the size of a product while maintaining or even increasing
its price.
With the increases in raw materials costs, many food suppliers have
resorted to this practice to the detriment of consumers.
Several distributors have denounced this practice to consumers
through shrinkflation campaigns, which in some cases have led to
the distributor being found guilty of disparagement or, on the
contrary, to the supplier's request for a conviction of the
distributor being rejected.
To provide a framework for the content and format of the
information provided to consumers, the French Ministry of the
Economy and Finance adopted on April 16th a decree relating to
consumer information on products price whose quantity has been
reduced.
An obligation on distributors relating to the display their products
From July 1st, 2024, companies (i) operating in the sector of
distribution of widely-consumed products as defined in Article
L.441-4 of the French Commercial Code and (ii) operating, directly
or indirectly, a store with a sales area of more than 400 square
metres will have to inform consumers of the products concerned by
"shrinkflation" by means of a specific display.
This information must be displayed directly on the packaging of the
product concerned or on a label placed nearby and contain the
following words in a legible and visible manner:
"For this product, the quantity sold has varied from X to
Y and its price (specify the unit of measurement concerned) has
increased by ....% or ..... € ".
The decree specifies that the obligation to display this
information applies to all pre-packaged consumer products with a
constant nominal quantity that have undergone a downward change in
weight or volume. However, this new regulation does not apply to
pre-packaged food products with variable quantities (e.g.
pre-packaged "deli" products) or to non-pre-packaged food
products sold in "bulk" format.
The information of the price increase for products which have been
reduced in quantity must be displayed for a period of 2 months from
the date the product with a reduced quantity is put on the
market.
Failure to comply with this requirement is punishable, under
Article L.112-1 of the French Consumer Code, by an administrative
fine of up to €3,000 for an individual and €15,000 for a
legal entity.
Shadow areas not covered by the Decree of 16 April 2024
The adoption of the decree reflects the government's
intention to impose firstly on the distributor the obligation to
inform consumers of changes in the constant nominal quantity of
products that have undergone a downward change in weight or
volume.
While it has the merit of providing a framework for the
communication format that must be brought to the consumer's
attention, the new regulation remains silent on certain practical
aspects.
Indeed, one can wonder how the distributor will be informed of
changes in the weight or volume of products. The information will
first be available to the supplier of the products concerned, who
will then have to set up precise and detailed monitoring of changes
in product weight and volume. However, the supplier is not subject
to this obligation.
Therefore in order to comply with this new display obligation, the
distributor and the supplier will have to work together. But what
happens if they don't?
The discussions surrounding "shrinkflation" don't
seem to be over, and suppliers themselves could soon be subject to
new labelling obligations. But, in fact, they already are.
Stay tuned!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.