Shrinkflation vs Price Rises: Which One Is Actually Working in 2026?
The last quiet pack shrink in European FMCG happened around 2019. Three forces made sure there have not been many since.
Both moves bring in the same extra money per pack. Only one of them made it to the back half of the decade.
The shelf labels that changed a category
In September 2023, small paper signs started appearing along Carrefour shelves in France. They sat right next to specific products and read, in plain French, that the pack had got smaller and the price per unit had gone up. They called out Lay's, Lipton, Cheetos, 7 Up and Quaker from PepsiCo, Viennetta and Cif from Unilever, Quality Street and Maggi from Nestlé. Some of the labels were red. All of them said, in one form or another, that the maker had shrunk the pack and was charging you more for less.¹
A commercial tactic that had lived quietly inside Revenue Growth Management (RGM) decks for years suddenly had a face. Shoppers stood in front of the shelf and read the accusation out loud. Four months later, after a breakdown in the yearly negotiation, Carrefour pulled PepsiCo products off its shelves across France, Italy, Spain, Belgium and Poland.² By the time PepsiCo and Carrefour patched most of their listings back together in mid-2024, France had passed a new law. Starting on 1 July 2024, brands that shrank a pack had to put a warning label on the pack itself.³
You could draw a line through those three events and call it the end of cheap shrinkflation in Europe. That is roughly what happened. The story of how it happened, and what commercial teams should do now that their favourite silent move has become a loud one, is the point of this article.
Why shrinkflation was the default move in the first place
To understand why the tactic became so common between 2020 and 2023, it helps to see the maths behind it. A 5% price rise in a mainstream Fast-Moving Consumer Goods (FMCG) category usually costs you about 6% of your sales. That is the pattern across hundreds of published elasticity studies in consumer goods.⁴ A 5% pack shrink in the same category usually only costs you about 3%, often less. Shoppers look at the shelf price. They do not usually look at the price per gram, and they definitely do not weigh the pack.
Halve the sales loss for the same per-pack profit, in a cost environment where margins were under pressure every quarter, and you can see the appeal. During 2021 and 2022, nearly every major consumer goods (CPG) company in Europe used some version of the move. When the Boston Consulting Group (BCG) later published its big retrospective on the 2022 to 2024 period, it found that the top ten global consumer goods companies had taken roughly 70% of their growth from price, with volume contributing almost nothing.⁵ A lot of that 70% was list-price rises. A quieter share of it was shrink.
The argument everyone used in the commercial steering committee was that shoppers would not notice, or would not care enough to change brand. Until quite recently, that was empirically true.
Three forces that took the shine off the tactic
Three things happened between late 2023 and mid-2024 that broke the "they will never notice" assumption.
The first was retailer activism. Carrefour's September 2023 shelf labels were not a marketing campaign. They were a negotiating move. Alexandre Bompard, the Carrefour chief executive, said publicly that the labels were there "to force manufacturers to review their pricing policy".¹ The implication sat underneath: if the shrink had been quiet enough to make the category manager look bad, retailers were now willing to make it loud enough to make the brand look bad. Carrefour is not a small player in France. It carries about 20% of the food grocery market.² When a retailer of that size decides to take the hidden out of hidden shrink, the tactic becomes visibly different overnight.
The second was regulation. France's Order of 16 April 2024, which took effect on 1 July, forced any brand selling in France to stick a visible label on the pack itself whenever the pack had got smaller and the price per unit had gone up. The label has to stay on the pack for two months from the day the shrunk version hits the shelf.³ That sounds like a small compliance burden, and it is. The real effect is psychological. The first time a shopper picks up the pack, they see the warning. The quiet window between the shrink and the moment a shopper might figure it out from the grams has been closed by law. Italy brought in something similar in late 2024. Germany's Verbraucherzentrale Hamburg has been tracking shrunk packs under the Mogelpackung heading for years and now publishes a live league table.⁶ In the UK, the consumer magazine Which? has kept a rolling shrinkflation watchlist since 2022 that gets wide press coverage each time it updates.⁷
The third was speed of information. A pack that got smaller used to be a problem that moved at the pace of a category review. Now it moves at the pace of a screenshot. Retailers' own shelf teams photograph new arrivals. Consumer groups run Telegram channels and Reddit threads. Local journalists publish explainer pieces the week a change lands. The gap between a shrink and the accusation has collapsed from months to hours. That changes the maths on the reversibility of the move. The classic defence, "we'll quietly put the grams back next year", stopped being quiet.
The one question that now usually decides it
The old decision looked at five things more or less in parallel: how long your cost problem would last, how strong your brand was, which pack you were thinking of shrinking, whether your retailer was pushing back, and whether your shelf price was sitting right under a round number. Any of the five could decide the move, and in 2021 the fourth one was a mild weight at the back of the analysis. Most category managers ticked it off and moved on.
In 2026 it is the question that usually decides it on its own.
Ask yourself: is any of the retailers you sell to in your main market actively flagging shrinkflation on their shelves, in their own comms, or in any category review you have had in the last year? Is the market you operate in covered by on-pack disclosure rules, as France is, or by active consumer-watchlist coverage, as Germany and the UK are? Has any newsroom or national-level consumer organisation published a list of shrunk products that included yours or a close competitor of yours? If the answer to any one of those is yes, then the "they will never notice" logic stops holding, and the expected sales loss from a pack shrink starts to look more like the sales loss from a straight price rise. Sometimes worse, because a price rise is a number, and a shrink with a warning label on it is a story.
That flip is what makes the old framework insufficient. The five questions still matter. The fourth one now sets a filter on the other four. If retailer activism and regulation are present, the pack-shrink branch of the tree is mostly closed. If both are absent, you still have the move in your toolbox, but only for now, and only while nothing changes in the broader environment.
The companies that have been slowest to absorb this are the ones whose 2022 and 2023 plans were most heavily pack-shrink weighted. When Simon-Kucher published its 2025 Growth Playbook, it called out that part of the industry had built so much habitual reliance on quiet shrink that it had lost the muscle to run list-price discipline. The 2026 job of rebuilding that muscle is harder than the 2016 job was, because retailers have learned what to push back on.⁸
The other four questions still matter, just less equally
The other questions have not disappeared. They just occupy less of the total decision weight than they used to.
Brand strength still sets the ceiling on a price rise. A brand selling at 20% or more above the category average can absorb the visible sting of a new shelf price without losing much share. A brand sitting mid-category cannot, and a price rise there will cost measurably more volume than the published meta-mean suggests.⁴ The elasticity number to reach for there lives in the elasticity lesson, which walks through the brand-power buffer.
Pack choice still matters. Your weekly-shop pack is the one most shoppers buy on autopilot. It handles a small shrink better than your entry-level one or your family-sized one. Shrink the entry-level pack and your price per gram jumps by enough that shoppers switch to private label on the next visit. Shrink the family pack, which shoppers buy expecting plenty, and they notice immediately. This is the core of what Price-Pack Architecture (PPA) teaches: different packs play different roles, and the rules for raising or shrinking them are not the same.
Round-number thresholds still bite. A shelf price of $1.99 going to $2.09 is a 5% rise that costs you more like a 10% rise in actual sales, because shoppers hate crossing the $2 line. This is the classic psychological-pricing finding, and it is the one case where a shrink still beats a rise even in markets with on-pack disclosure, because crossing a round-number threshold can lose you more volume than a labelled shrink does. If your price is sitting far from a round number, the threshold question is mostly ignorable. If it is sitting right under one, the threshold question is still doing a lot of work.
And the duration of your cost problem still sets the gate. A one-quarter cost spike from a single bad harvest or a short currency swing should not trigger a pricing move at all. The cure is a hedge, a promo pull-back, a shipper change. Permanent cost changes are different. The two-year run of cocoa, sugar, and shipping costs through 2023 and 2024 was real. It was not a one-off spike, and it was not going back to 2019 levels.
What a mainstream biscuit brand actually does in 2026
Imagine a mid-tier biscuit brand with a 300-gram weekly-shop pack on the shelf at $4.29. Your margin on the pack is about 42%. Over the last year, cocoa, sugar, and shipping have pushed your costs up by 9%. Your brand sells at about 8% above the category average. Two of your four biggest retailers run shrinkflation watchlists and have been vocal about it. The current price is in the middle of a range, not right under any magic round number.
On the old framework, you would probably shrink the pack. The maths says the sales loss is smaller. The pack is the right one to shrink. The premium position is not strong enough to absorb a visible price rise easily.
On the 2026 framework, you raise the price. The retailer situation alone closes the pack-shrink branch. A 4.9% price rise to $4.50 looks ugly on the invoice and eats some of the year-end negotiation goodwill. But you do not spend the following six weeks watching a photograph of your shrunk pack circulate in a German consumer-group press release. The sales hit is real. The brand risk is finite, containable, and measured in margin rather than in reputation.
The full walk through this decision, with the break-even maths on how much sales loss a 4.9% price rise can actually absorb, sits in the Price Rise or Pack Shrink playbook. The headline number is that a 42% margin brand can lose up to about 10.5% of its sales on a 4.9% rise before it actually starts losing money. The published meta-mean for sales loss on a 5% rise is closer to 6%. So you go in with a safety cushion of about four percentage points. Not huge, but real.
Where this goes from here
By the time we get to the back half of 2026, the European story is largely settled. Shrink without disclosure is gone in France, effectively gone in Italy, and under active consumer-group pressure everywhere else on the continent. The United States is moving more slowly. There is no federal on-pack disclosure law, and the big national grocers have not built a Carrefour-style shelf-label programme. But consumer-press coverage of shrinkflation has stayed loud, and several private-label teams inside the large US grocers have started comparing grams per dollar between their own lines and the national brands. Those comparisons have a way of leaking.
The 2026 winning move for a mainstream brand is almost never a pure shrink. It is a smaller visible price rise, paid for in part by a tighter promotional calendar, supported by cost-out work on pack materials, sometimes twinned with a value-tier launch that protects the entry price point the brand used to defend with shrink. Nestlé cut list prices in the United States in the first quarter of 2025 for the first time in nearly four years, and Unilever flagged that volume would have to come back into the growth mix.⁹ The shift is already visible in how the big names report their quarters. The "1% on price" argument is still right about the profit leverage: the smallest real price move in a mainstream category is worth more than the biggest plausible volume gain. But the cost of getting a price rise to stick has gone up, and the role of the rest of the RGM stack in supporting it has gone up with it.
The harder question for a commercial leader in 2026 is not "price or pack". That one has an answer now, in most markets, most of the time. The harder question is what a company should do with the RGM capability it built around pack shrink between 2020 and 2023. A lot of that capability is still useful. Pack architecture work, price-per-gram hygiene across the ladder, entry-tier defence, even occasional shrink in markets that still tolerate it. But the central move that the decade started with, the quiet 10-gram cut that nobody was supposed to see, is on the way out. The companies that face that honestly, and rebuild their pricing discipline around it, will spend less time in 2027 explaining shrinkflation in the press and more time growing volume again. That is where the six-lever RGM framework and the return of volume to the growth mix are both pointing.
If you want the quick version
The narrative above is the long read. The utility version, with the five questions laid out as a decision tree, a worked example, and the Carrefour PepsiCo case study written up as a rubric, lives at the Price Rise or Pack Shrink playbook. The playbook is the tool. This article is the context.
References
- Reuters. "Carrefour's shrinkflation tags name and shame consumer goods makers." 12 September 2023. https://www.reuters.com/business/retail-consumer/carrefours-shrinkflation-tags-name-shame-consumer-goods-makers-2023-09-12/
- Fortune. "Carrefour pulls PepsiCo snacks after price hikes." 4 January 2024. https://fortune.com/europe/2024/01/04/shrinkflation-pepsico-price-increases-carrefour-french-supermarket-pulls-snacks/
- Bird & Bird. "France: Shrinkflation, a new obligation to inform consumers." July 2024. https://www.twobirds.com/en/insights/2024/france/shrinkflation-nouvelle-obligation-d-informer-les-consommateurs
- Published meta-analyses of brand-level price elasticity in consumer goods (unconditional mean near negative 2.6 across roughly 1,851 estimates; older samples near negative 1.76). Cited in BCG and McKinsey CPG pricing publications, including BCG's 2025 volume-led growth research (reference 5) and McKinsey's growth marketing and sales practice material: https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights
- Boston Consulting Group. "Driving successful volume-led growth in consumer markets." 2025. https://www.bcg.com/publications/2025/driving-volume-led-growth-in-consumer-markets
- Verbraucherzentrale Hamburg. "Mogelpackungen." Running watchlist of shrunk consumer goods packs in Germany. https://www.vzhh.de/themen/mogelpackungen
- Which?. "Shrinkflation watch: the snacks, drinks and groceries getting smaller." Updated rolling. https://www.which.co.uk/news/article/shrinkflation-what-is-it-and-which-products-have-shrunk
- Simon-Kucher. "From easy gains to rough terrain: 2025 growth playbook." https://www.simon-kucher.com/en/insights/easy-gains-rough-terrain-2025-growth-playbook-unlock-nuanced-cpg-opportunity
- Fortune. "Nestle and Unilever flag price cuts and tariff pressure in Q1 2025 results." April 2025. https://fortune.com/europe/2025/04/24/price-hikes-unilever-nestle-tariffs/
📚 Learn more on RGM Academy
Take the ideas in this article further, inside RGM Academy's lessons:
Price Thresholds. Why a price rise that crosses a round number costs more volume than the size of the rise suggests, and how to time a move to avoid the worst threshold points. Why this matters for this article: question 5 of the decision is a threshold question, and most commercial teams under-estimate how much of the volume loss on a price rise lives at the round-number crossings. → Start the lesson
Brand Power and Pricing Room. How to measure the gap between your brand's average shelf price and the category average, and how big that gap has to be before you can raise prices without losing much volume. Why this matters for this article: question 2 of the decision is entirely about this gap, and brands that misread their own premium position get the pack-versus-price choice wrong. → Start the lesson
Pack Roles. The pack-by-pack playbook for which packs in your range handle a shrink well, which handle a rise well, and which should stay untouched. Why this matters for this article: question 3 of the decision is the pack-choice question, and it is the one where Price-Pack Architecture knowledge beats general pricing instinct. → Start the lesson
Price Elasticity of Demand. The foundation lesson on how shoppers actually respond to price, and where the "5% rise equals 6% sales loss" number in this article comes from. Why this matters for this article: every number in the worked example starts with an elasticity assumption, and most commercial teams work with a wrong one. → Start the lesson