Why is Cadbury Dairy Milk's size reducing - Shrinkflation Explained


     If you're a regular chocolate consumer you know for a fact that Cadbury's flagship product Dairy Milk, irrespective of price has been shrinking in size for a long time and would have wondered why that's happening. I too had similar doubt for a long time and in this post I'll share with you what might be the few possible reasons for that.

Not just Dairy Milk, many items that we buy everyday shrink in size. This in economics is called shrinkflation - size shrinks but the price remains same.

Here are the three reasons on why it's happening :-

1) Inflation

        If you don't know what inflation is, it means the general rise in price level in an economy over a period of time. The rise is chocolate's price will also contribute to overall inflation of the economy but what contributes to chocolate's price inflation ?

Imagine if raw materials like cacao seed's price increases. Or a rise in oil price ? This will increase the price of other commodities (so employees will ask for a raise to maintain their standard of living) and transport cost.

So, this will increase the cost of production which in turn affects the end price. If we just account for India's average inflation of 3-4% then the size of Dairy Milk will halve every 18-24 years.

2) Profits

    Every company's goal is to increase its profit year of year. For this they'll try to increase sales, improve efficiency or reduce the quantity. This isn't necessarily bad, just like how we would love to get an increment they too want it.

Also they'll reinvest the money back into the economy and this in turn benefits everyone and creates new jobs.

Let's assume they want to increase their profit by 2%. Then this along with inflation will reduce the size of Dairy Milk in half every 12-16 years.

3) Greed

I don't need to explain about this, you might have been thinking about this from the start. Some companies might decrease the quantity when there's a supply shock ( For example maybe cacao produce would have been lesser that year ) but when things go normal they won't increase the quantity. Or maybe they want more and more of profits.

If we just consider first two factor for dairy milk, then it should halve every 12-16 years. But did that happen? I don't remember the size, so you decide it for yourself.

Thanks for reading this far. This is my first blog post in this blog after several years. See you in another post.

Why is Cadbury Dairy Milk's size reducing - Shrinkflation Explained Why is Cadbury Dairy Milk's size reducing - Shrinkflation Explained Reviewed by Moses chandramouli on January 09, 2021 Rating: 5

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