Several companies have been using shrinkflation to rip off customers for years. In 2015, Pepsi and Coca-cola effectively utilized the strategy until Bigi and Big Cola disrupted the market—a move that reversed both household brands into default setting.
However, Pepsi and Coca-cola aren’t the only fast-moving consumer goods makers involved in shrinkflation as this deceptive but legal activity dates back to over a decade in the Nigerian market.
Shrinkflation is a word coined from shrink and inflation. It simply implies a reduction in the quality or quantity of a product with the product price remaining the same. In the case of Nigeria, product price increases without justifiable reasons given by manufacturers. This is common among FMCG firms even with regulators’ connivance. Thus it is the act of giving customers less value for their money.
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Shrinkflation is how some companies pass on costs of production to their customers in a manner that is not usually noticeable. It is deceptive from the customers’ perspective. But in the business world, it is a legal concept particularly in Nigeria where consumer protection is weak.
Food and beverage markets thrive when companies compete through prices and product size. When this happens, it is advantageous to the customers. But over the years, household companies have employed shrinkflation to stay afloat as brand loyalists are often absent-minded when purchasing goods. In some cases companies don’t hide this change, they also add extra prices to their goods.
Why brands engage in shrinkflation
When companies’ production costs rise, they often put the burden on customers to cut back operation expenses. One of their most effective methods is the reduction of products’ quality and quantity while the price remains unchanged.
Companies prefer this strategy because it’s less visible to non-discerning customers since the difference is usually small or unnoticeable unlike price increments which can’t go unnoticed by customers.
Occasionally, brands opted for shrinkflation over fears that price hike will provoke customers to switch loyalty to their competitors who maintain their prices though they may have reduced their product sizes.
One reasons given by customers or loyalists of a particular brand when such brand reduce the quality or size of its product is economy. They often cited the unhealthy economic situation in the country for sharp practices or misdemeanor by manufacturers or any other individual.
For instance, the 2016 Cola War in Nigeria brought to fore the uniqueness of customers in the whole process as competitive prices and diverse sizes of bottles were released to the market by new entrants during the country’s economic recession of 2015 -2017.
Companies that engage in shrinkflation
Drinks makers: Several brands have at one time or the other reduce the size of their products in order to accrue more profits in Nigeria. These companies don’t just reduce the size of their products, they also increase the prices.
Biscuits and confectionery firms: In the early part of this century, Coaster Biscuit put seven pieces in a pack but as years went by the number began to drop even as each stick became leaner until the company felt three would be enough for its customers. This move was later accompanied by a price-hike. A Coaster pack with seven sticks was initially sold at N5, but today, a pack with three biscuits goes for N10.
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Other brands that also adopted shrinkflation are Speedy, Coconut Biscuit, Fish Biscuit and Crackers. These brands have also hike their product prices.
Burger and sardine companies: Apart from biscuits companies, the manufacturer of Burger peanut is successfully selling breeze to consumers who have termed it ‘airbag’ due to the excessive air inside the pack. Also on the list is Titus Sardine, which initially put four pieces of fish in a tin and sold it for N200. The product now juggles between three and two pieces for N250.
In a chat with our Analyst, a brand expert, Segun Akinleye, explained the term shrinkflation and the rationale behind its adoption by manufacturers.
He said: “Production costs are a major factor in pricing. So, it is not surprising that companies reduce the quality of products while retaining the price. Some, however, rather than reduce the quality, reduce the quantity without letting the public know.
“The reason is simple: To cut production cost instead of transferring the additional cost of production to the consumers. Brands do this a lot all over the world, especially when the products have got substitutes. Secondly, as for those that reduce the quantity or quality, while increasing the price, I don’t think that’s a good business strategy.
“What companies need to do is cut the component costs even if it’s by a slight percentage. This can have a substantial impact on cost of production. For example, redesigning a product is an effective way of reducing production costs.”
Akinleye, who is also the founder of Kontact Media, said shrinkflation is also necessary to enable firms survive tough economic situations.
“This is because if such a strategy isn’t employed, some companies will exit the market,” he added.
Competition as a solution to shrinkflation
While shrinkflation has been successful in other FMCG markets, the beverage sector has struggled to implement such business strategy. Although the likes of Coca-cola and Pepsi tried the strategy but it backfired spectacularly when Big Cola and Bigi brands made their way into the market with competitive prices in the same period that Coca-cola and Pepsi company added numbers to their price points.
The disruption caused by Bigi and Big Cola with bigger and affordable products showed that Pepsi and Coca-cola could actually offer consumers value for their money. Both companies later return to the drawing board to win back the low-end of the market but it was too late as majority of the distributors had already adopted Big Cola and Bigi variants as ideal replacements for the expensive Pepsi and Coca-cola.
Akinleye added: “There are substitute products everywhere. If the price of Sunlight soap is too much, I can go for Ariel. If I can’t afford Milo, I can go for Bournvita, etc. That’s the beauty of capitalism..”
Competition is not a lasting solution
While competition compelled Pepsi and Coca-cola to backtrack to some extent, it does not always work for all FMCG markets as evident in the biscuit market. While there are surplus substitutes, most brands have their own unique tastes which cannot be easily substituted for others.
There were reports that some companies collude to fix market price. So, competition at times isn’t as effective as customers expect. In South Africa some years back, it was discovered that four of the country’s largest milling companies –Premier Foods, Tiger Brands, Foodcorp and Pioneer Foods (makers of Nigerian loaf, Butterfield) – had colluded to fix market price.
South African Competition Commission uncovered their secret meeting points to be churches, stadia, hotels, and other places. These companies were later fined by the regulator.
The action taken by the regulator is laudable because when household brands choose to dump competitive prices for a fixed price, it’s almost impossible for new and smaller entrants to disrupt the market or break the grips of these household products as their entry will not have far-reaching effect in the long-term.
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The way out
To find a lasting solution to this scenario, a Deputy Director at the Consumer Protection Council (CPC), Abiodun Obimuyiwa, had in 2018 promised to probe manufacturers of sachet goods after acknowledging the menace of shrinkflation.
“Information reaching our offices showed that consumers feel short-changed with the goods purchased with their hard-earned money,” he said.
COVID-19 Update in Nigeria
On the 4th of August 2020, 304 new confirmed cases and 14 deaths were recorded in Nigeria.
The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increase as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 44,433 confirmed cases.
On the 4th of August 2020, 304 new confirmed cases and 14 deaths were recorded in Nigeria, having carried out a total daily test of 1,601 samples across the country.
To date, 44,433 cases have been confirmed, 31,851 cases have been discharged and 910 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 289,133 tests have been carried out as of August 3rd, 2020 compared to 287,532 tests a day earlier.
COVID-19 Case Updates- 4th August 2020,
- Total Number of Cases – 44,433
- Total Number Discharged – 31,851
- Total Deaths – 910
- Total Tests Carried out – 289,133
According to the NCDC, the 304 new cases are reported from 19 states- FCT (90), Lagos (59), Ondo (39), Taraba (18), Rivers (17), Borno (15), Adamawa (12), Oyo (11), Delta (9), Edo (6), Bauchi (4), Kwara (4), Ogun (4), Osun (4), Bayelsa (3), Plateau (3), Niger (3), Nasarawa (2) and Kano (1)
Meanwhile, the latest numbers bring Lagos state total confirmed cases to 15,414, followed by Abuja (4,087), Oyo (2,782), Edo (2,317), Rivers (1,859), Kano (1,598), Delta (1,529), Kaduna (1,498), Ogun (1,411), Plateau and Ondo (1,243), Enugu (846), Ebonyi (808), Kwara (790), Katsina (746), Borno (628), Gombe (620), Abia (602), Osun (584), and Bauchi (565).
Imo State has recorded 469 cases, Benue (356), Bayelsa (342), Nasarawa (341), Jigawa (322), Niger (226), Akwa Ibom (221), Adamawa (176), Sokoto (154), Ekiti (152), Anambra (135), Kebbi (90), Zamfara (77), Taraba (72), Yobe (67), Cross River (58), while Kogi state has recorded 5 cases only.
Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.
|Date||Confirmed case||New cases||Total deaths||New deaths||Total recovery||Active cases||Critical cases|
|August 4, 2020||44433||304||910||14||31851||11672||7|
|August 3, 2020||44129||288||896||8||20663||22570||7|
|August 2, 2020||43841||304||888||5||20308||22645||7|
|August 1, 2020||43537||386||883||4||20287||22567||7|
|July 31, 2020||43151||462||879||1||19565||22707||7|
|July 30, 2020||42689||481||878||5||19270||22541||7|
|July 29, 2020||42208||404||873||5||19004||22331||7|
|July 28, 2020||41804||624||868||8||18764||22172||7|
|July 27, 2020||41180||648||860||2||18203||22117||7|
|July 26, 2020||40532||555||858||2||17374||22300||7|
|July 25, 2020||39977||438||856||11||16948||22173||7|
|July 24, 2020||39539||591||845||12||16559||22135||7|
|July 23, 2020||38948||604||833||20||16061||22054||7|
|July 22, 2020||38344||543||813||8||15815||21716||7|
|July 21, 2020||37801||576||805||4||15677||21319||7|
|July 20, 2020||37225||562||801||12||15333||21091||7|
|July 19, 2020||36663||556||789||11||15105||20769||7|
|July 18, 2020||36107||653||778||6||14938||20391||7|
|July 17, 2020||35454||600||772||3||14633||20049||7|
|July 16, 2020||34854||595||769||9||14292||19793||7|
|July 15, 2020||34259||643||760||6||13999||19500||7|
|July 14, 2020||33616||463||754||10||13792||19070||7|
|July 13, 2020||33153||595||744||4||13671||18738||7|
|July 12, 2020||32558||571||740||16||13447||18371||7|
|July 11, 2020||31987||664||724||15||13103||18160||7|
|July 10, 2020||31323||575||709||20||12795||17819||7|
|July 9, 2020||30748||499||689||5||12546||17513||7|
|July 8, 2020||30249||460||684||15||12373||17192||7|
|July 7, 2020||29789||503||669||15||12108||17012||7|
|July 6, 2020||29286||575||654||9||11828||16804||7|
|July 5, 2020||28711||544||645||11||11665||16401||7|
|July 4, 2020||28167||603||634||6||11462||16071||7|
|July 3, 2020||27564||454||628||12||11069||15867||7|
|July 2, 2020||27110||626||616||13||10801||15693||7|
|July 1, 2020||26484||790||603||13||10152||15729||7|
|June 30, 2020||25694||561||590||17||9746||15358||7|
|June 29, 2020||25133||566||573||8||9402||15158||7|
|June 28, 2020||24867||490||565||7||9007||14995||7|
|June 27, 2020||24077||779||558||4||8625||14894||7|
|June 26, 2020||23298||684||554||5||8253||14491||7|
|June 25, 2020||22614||594||549||7||7822||14243||7|
|June 24, 2020||22020||649||542||9||7613||13865||7|
|June 23, 2020||21371||452||533||8||7338||13500||7|
|June 22, 2020||20919||675||525||7||7109||13285||7|
|June 21, 2020||20242||436||518||12||6879||12847||7|
|June 20, 2020||19808||661||506||19||6718||12584||7|
|June 19, 2020||19147||667||487||12||6581||12079||7|
|June 18, 2020||18480||745||475||6||6307||11698||7|
|June 17, 2020||17735||587||469||14||5967||11299||7|
|June 16, 2020||17148||490||455||31||5623||11070||7|
|June 15, 2020||16658||573||424||4||5349||10885||7|
|June 14, 2020||16085||403||420||13||5220||10445||7|
|June 13, 2020||15682||501||407||8||5101||10174||7|
|June 12, 2020||15181||627||399||12||4891||9891||7|
|June 11, 2020||14554||681||387||5||4494||9673||7|
|June 10, 2020||13873||409||382||17||4351||9140||7|
|June 9, 2020||13464||663||365||4||4206||8893||7|
|June 8, 2020||12801||315||361||7||4040||8400||7|
|June 7, 2020||12486||260||354||12||3959||8173||7|
|June 6, 2020||12233||389||342||9||3826||8065||7|
|June 5, 2020||11844||328||333||10||3696||7815||7|
|June 4, 2020||11516||350||323||8||3535||7646||7|
|June 3, 2020||11166||348||315||1||3329||7522||7|
|June 2, 2020||10819||241||314||15||3239||7266||7|
|June 1, 2020||10578||416||299||12||3122||7157||9|
|May 31, 2020||10162||307||287||14||3007||6868||7|
|May 30, 2020||9855||553||273||12||2856||6726||7|
|May 29, 2020||9302||387||261||2||2697||6344||7|
|May 28, 2020||8915||182||259||5||2592||6064||7|
|May 27, 2020||8733||389||254||5||2501||5978||7|
|May 26, 2020||8344||276||249||16||2385||5710||7|
|May 25, 2020||8068||229||233||7||2311||5524||7|
|May 24, 2020||7839||313||226||5||2263||5360||7|
|May 23, 2020||7526||265||221||0||2174||5131||7|
|May 22, 2020||7261||245||221||10||2007||5033||7|
|May 21, 2020||7016||339||211||11||1907||4898||7|
|May 20, 2020||6677||284||200||8||1840||4637||7|
|May 19, 2020||6401||226||192||1||1734||4475||7|
|May 18, 2020||6175||216||191||9||1644||4340||7|
|May 17, 2020||5959||388||182||6||1594||4183||7|
|May 16, 2020||5621||176||176||5||1472||3973||7|
|May 15, 2020||5445||288||171||3||1320||3954||4|
|May 14, 2020||5162||193||168||3||1180||3815||4|
|May 13, 2020||4971||184||164||6||1070||3737||4|
|May 12, 2020||4787||146||158||6||959||3670||4|
|May 11, 2020||4641||242||152||10||902||3589||4|
|May 10, 2020||4399||248||142||17||778||3479||4|
|May 9, 2020||4151||239||127||11||745||3278||4|
|May 8, 2020||3912||386||118||10||679||3115||4|
|May 7, 2020||3526||381||108||4||601||2818||4|
|May 6, 2020||3145||195||104||5||534||2507||1|
|May 5, 2020||2950||148||99||5||481||2370||4|
|May 4, 2020||2802||245||94||6||417||2291||2|
|May 3, 2020||2558||170||88||2||400||2070||2|
|May 2, 2020||2388||220||86||17||351||1952||2|
|May 1, 2020||2170||238||69||10||351||1751||2|
|April 30, 2020||1932||204||59||7||317||1556||2|
|April 29, 2020||1728||196||52||7||307||1369||2|
|April 28, 2020||1532||195||45||4||255||1232||2|
|April 27, 2020||1337||64||41||0||255||994||2|
|April 26, 2020||1273||91||41||5||239||994||2|
|April 25, 2020||1182||87||36||3||222||925||2|
|April 24, 2020||1095||114||33||1||208||855||2|
|April 23, 2020||981||108||32||3||197||753||2|
|April 22, 2020||873||91||29||3||197||648||2|
|April 21, 2020||782||117||26||3||197||560||2|
|April 20, 2020||665||38||23||1||188||466||2|
|April 19, 2020||627||86||22||2||170||436||2|
|April 18, 2020||541||48||20||2||166||356||2|
|April 17, 2020||493||51||18||4||159||317||2|
|April 16, 2020||442||35||13||1||152||277||2|
|April 15, 2020||407||34||12||1||128||267||2|
|April 14, 2020||373||30||11||1||99||263||2|
|April 13, 2020||343||20||10||0||91||242||2|
|April 12, 2020||323||5||10||0||85||228||2|
|April 11, 2020||318||13||10||3||70||238||2|
|April 10, 2020||305||17||7||0||58||240||2|
|April 9, 2020||288||14||7||1||51||230||2|
|April 8, 2020||274||22||6||0||44||226||2|
|April 7, 2020||254||16||6||1||44||204||2|
|April 6, 2020||238||6||5||0||35||198||2|
|April 5, 2020||232||18||5||1||33||194||2|
|April 4, 2020||214||5||4||0||25||185||0|
|April 3, 2020||209||25||4||2||25||180||0|
|April 2, 2020||184||10||2||0||20||162||0|
|April 1, 2020||174||35||2||0||9||163||0|
|March 31, 2020||139||8||2||0||9||128||0|
|March 30, 2020||131||20||2||1||8||121||0|
|March 29, 2020||111||22||1||0||3||107||0|
|March 28, 2020||89||19||1||0||3||85||0|
|March 27, 2020||70||5||1||0||3||66||0|
|March 26, 2020||65||14||1||0||2||62||0|
|March 25, 2020||51||7||1||0||2||48||0|
|March 24, 2020||44||4||1||0||2||41||0|
|March 23, 2020||40||10||1||1||2||37||0|
|March 22, 2020||30||8||0||0||2||28||0|
|March 21, 2020||22||10||0||0||1||21||0|
|March 20, 2020||12||4||0||0||1||11||0|
|March 19, 2020||8||0||0||0||1||7||0|
|March 18, 2020||8||5||0||0||1||7||0|
|March 17, 2020||3||1||0||0||0||3||0|
|March 16, 2020||2||0||0||0||0||2||0|
|March 15, 2020||2||0||0||0||0||2||0|
|March 14, 2020||2||0||0||0||0||2||0|
|March 13, 2020||2||0||0||0||0||2||0|
|March 12, 2020||2||0||0||0||0||2||0|
|March 11, 2020||2||0||0||0||0||2||0|
|March 10, 2020||2||0||0||0||0||2||0|
|March 9, 2020||2||1||0||0||0||2||0|
|March 8, 2020||1||0||0||0||0||1||0|
|March 7, 2020||1||0||0||0||0||1||0|
|March 6, 2020||1||0||0||0||0||1||0|
|March 5, 2020||1||0||0||0||0||1||0|
|March 4, 2020||1||0||0||0||0||1||0|
|March 3, 2020||1||0||0||0||0||1||0|
|March 2, 2020||1||0||0||0||0||1||0|
|March 1, 2020||1||0||0||0||0||1||0|
|February 29, 2020||1||0||0||0||0||1||0|
|February 28, 2020||1||1||0||0||0||1||0|
FG increases hate speech fine from N500,000 to N5 million, moves against monopoly and antitrust
The new regulation is part of the amended Nigerian Broadcasting Code.
The Federal Government on Tuesday, August 4, 2020, announced the increase of fine for hate speech from N500 to N5 million.
The announcement was made by the Minister for Information and Culture, Alhaji Lai Mohammed, at the unveiling ceremony of the revised National Broadcasting Code by the National Broadcasting Commission (NBC) in Lagos on Tuesday.
This new regulation is part of the amended Nigerian Broadcasting Code which contains Antitrust provision aimed at boosting local content and encouraging the growth of the local industry, among other provisions.
This disclosure is contained in a press statement that was issued by the Special Assistant to the President (Media), Office of the Minister for Information and Culture, Segun Adeyemi.
The Minister said that the Antitrust provision will boost local content and local industry due to laws prohibiting exclusive use of rights by broadcasters who intend to create monopolies and hold the entire market to themselves. The provision will also open access to premium content.
Alhaji Lai Mohammed said, ‘’I must explain that this provision is not new to Nigeria Broadcasting. Exclusivity was disallowed at a certain time in the history of our broadcasting. I recall Multichoice sub-licensing EPL matches to other local operators in Nigeria. I recall HITV engaging several local operators on sub-licensing the EPL when they got the rights.”
In a bid the protect broadcast stations and promote sustainability for the station owners and content producers, the revised code contains law prohibiting backlog of advertising debts. It also contains law on the registration of Web Broadcasting, which will grant the country the opportunity to regulate negative foreign broadcasts that can be harmful to the country.
Going further the minister also said, ‘’The provisions on the responsibility of broadcast stations to devote airtime to national emergencies…obviously mandates terrestrial and Pay TV channels to make their services available to Nigerians at time of national emergencies – like the ongoing Covid-19 pandemic – for their education and enlightenment.”
He revealed that the review of the broadcasting was done in the national interest as it was necessitated by the Presidential directive in the wake of the 2019 general elections, which sought for an inquiry into the regulatory role of NBC.
The Minister also disclosed that President Buhari had ordered the probe of the conduct of the various broadcast stations before, during and after the polls.
Mohammed also pointed out, ‘’But, as it currently stands, the 6th edition and the amendments, which we are unveiling today, remain the regulations for broadcasting in Nigeria. Our intention remains the good of the country. We need to catalyze the growth of the local industry. We need to create jobs for our teeming creative youths. The opportunities must be created and we believe that effective regulatory interventions are a sure way of attaining this. That’s why we will not waver.”
It can be recalled that in a bid to stem the tide of rising cases of hate speech and fake news, the Federal Government moved to introduce the fake news and hate speech bill, which they said creates apprehension, a lot of mistrust and divides the country along ethnic and religious lines.
Stakeholders and the general public were very critical of the bill because of some harsh clauses in the bill which includes the death penalty.
NDDC reveals more lists of contracts awarded to federal legislators
The Commission said it released the list to expose committee chairmen in the National Assembly.
The Niger Delta Development Commission (NDDC) said there is another list of emergency contracts that were awarded to National Assembly members in 2017 and 2019. This list was not submitted to National Assembly following the recent probe of the NDDC.
This disclosure was made in a press statement by the NDDC earlier today which was signed by the commission’s Director for Corporate Affairs, Charles Odili. According to the statement, the initial list that was submitted by the Minister for Niger Delta Affairs, Senator Godswill Akpabio, was actually compiled by the former management of the commission in 2018, not the minister himself.
The statement by the NDDC went further to note that the Interim Management Committee of the Commission stands by the list which came from the files already in the possession of the forensic auditors.
“The Interim Management Committee (IMC) of the Commission stands by the list, which came from files already in the possession of the forensic auditors. It is not an Akpabio list but the NDDC’s list. The list is part of the volume of 8,000 documents already handed over to the forensic auditors,” the statement said in parts.
In the meantime, the NDDC has urged prominent indigenes of the Niger Delta, whose names appeared on that list, not to panic, because the NDDC is aware that their names were used to secure contracts. The ongoing forensic audit would help to unearth those behind those contracts, the NDDC said in the statement.
Furthermore, the commission disclosed that it released the list to expose committee chairmen in the National Assembly who used fronts to collect contracts from the NDDC, some of which were never executed. Interestingly, the list did not include the unique case of 250 contracts that were signed for and collected in one day by one person, ostensibly for members of the National Assembly.
While assuring that the forensic audit exercise is on course, the NDDC noted that the commission had positioned 185 media support specialists to identify the sites of every project captured in its books for verification by the forensic auditors.
The NDDC then enjoined members of the public not to be distracted or swayed by a lot of misinformation and falsehood that are being orchestrated by mischief makers, even as more of such will be expected by those opposed to the IMC.
It can be recalled that Akpabio, while appearing before the members of the house of representatives ad-hoc committee probing the N40 billion corruption allegation against the IMC of NDDC, said that most of the contracts that are being awarded at the commission were given to members of the national assembly.
Not that likely, the Speaker of the House of Representatives, Femi Gbajabiamila, asked the minister to provide within 48 hours, the names of the legislators that benefitted from such contracts with full details or face legal action.
Senator Akpabio, in response to the ultimatum, sent an official letter to the Speaker, providing the names of the national assembly members that benefitted from such contracts.