Shrinkflation takes a bite out of Easter Business

Worse could be yet to come for shoppers and retailers trying to keep their food bills low.

Richard Walker, chief executive of Iceland, warned last week that retailers “cannot be seen as an endless sponge to absorb” price pressures, in a worrying sign that companies could pass on more costs to the buyers.

It will be a dangerous game for those who decide not to swallow the increases, especially with the cost of living crisis dominating the political agenda.

Dresser says it can be “detrimental” to a brand if customers notice price increases or other tactics such as downsizing the product.

“The contraction is preferred because it’s harder to follow,” he says. “Price hikes are also damaging and there are plenty of them in the space right now. With customers watching every penny, the hike is then amplified for the customer.”

Products and prices that consumers know best will be most at risk. Experts say mid-priced products are often squeezed in times of rising costs of living.

Premium brands often come out relatively unscathed, as more affluent customers are less likely to feel the effects of high inflation.

Tom Lees, brand strategy consultant at Kantar, explains that “some brands are obviously more price sensitive than others” and need to “make themselves indispensable” in the weekly grocery store.

“Chocolate bars are a great example of that,” he says. “People’s treat might have been before going out for a good meal, whereas now it might be buying that Dairy Milk chocolate bar to eat and sit on the sofa and relax in the evening.

“There is a way for them to validate that price by connecting to their customers’ needs.”

The Willy Wonkas of the world, however, may have less to fear from the cost of living crisis than many other food producers.

Despite growing cost pressures and worries about a further downturn, chocolate sales could be buoyed by the candy’s reputation for weathering recessions.

Sales surged for chocolatiers during the financial crisis as Britons tightened their belts elsewhere and used it as a less expensive treat while staying at home.

“Especially luxury chocolate, because people see it as five minutes of happiness,” says Cadbury of Love Cocoa.

“Maybe you can’t afford a nice watch, a nice new phone, a car or whatever, but you could afford luxury chocolate. The tastes of Hotel Chocolat and the Green & Black’s in the past have been very successful in coming out of recessions.

“That’s a potential thing for the chocolate industry that we could revisit.”

Even at a higher cost or smaller in size, chocolate may be the sweet treat shoppers can’t resist this Easter as recession risks rise.

Easter and the Easter egg

During the Easter weekend, most of us will keep the tradition and enjoy our chocolate eggs. But what is the connection between the Christian holiday and the Easter egg?

The tradition dates back to the early Christians of Mesopotamia, today’s Iraq.

Historians believe they were the first to associate eggs with Easter celebrations, drawing inspiration from the Persian tradition of painting eggs. They were considered a symbol of hope, fertility and growth.

Christians are said to have dyed the eggs red in memory of the blood of Jesus at the crucifixion, which were then broken together in celebrations.

The eggs were also stained green and yellow by the Christians of this region.

Their ritual then spread to the West and was officially adopted by the Christian Church as a symbol of the resurrection of Jesus.

Eggs were one of the foods that Christians were not allowed to eat during Lent, making them sought after after the fasting period was over.

Separately, in the early 18th century in Lancashire, locals developed the tradition of stepping eggs – those specially decorated for a festival at Easter.

They would wrap the eggs in onion skins, before boiling them to create a golden effect for decoration. Eggs were given as gifts during rhythmic egg games or raced down the hills and along the ground.

Such Easter egg rolls still happen, with the most famous held annually on the South Lawn of the White House, where children and parents are greeted by the US President and First Lady. The eggs are pushed into the grass with a spoon.

When it comes to chocolate Easter eggs, the first was introduced in the UK in 1873 by Fry’s, a family business. Founder Joseph Fry started the business selling drinking chocolate in the 1750s and his grandsons are hailed for creating the first chocolate bars in the 1860s.

Breaking away from the tradition of gifting each other painted chicken eggs, Fry’s put their own spin on it by molding their chocolate into the shape of an egg – and that’s how the first chocolate Easter egg was born.

The trend quickly took hold. Fry’s main competitor, Cadbury’s, began making its own chocolate Easter eggs two years later.

The Easter egg is by far the most common traditional method of celebrating Easter that has survived until today.

It has created a huge business, with millions of chocolate eggs sold each year: in 2019, UK consumers spent £206m on them.