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Buyers feel the squeeze on food

Ed Zhang

Suppliers of consumer goods on the mainland are doing whatever they can to get around the government's increasingly harsh pricing policies. But as a result, it is the consumers who are getting less bang for their buck.

An increasingly popular option is to reduce the size of product packages and content, according to a report yesterday in the People's Daily-affiliated Beijing Times, which pointed to a number of food items - ranging from soft drinks and potato chips to milk and yoghurt - staying the same price, but offering less.

It is an old marketing tactic, but a popular one, as studies have shown that fewer consumers notice when their favourite items have become smaller, as opposed to those who may be irked when the price-tag number is larger.

State media recently reported last month that mainland beverage and food giant Tingyi had trimmed the size of its bottled beverages from 500ml to 450ml. The company denied the accusation that its move was a 'price increase in disguise', saying it cost more to change the bottle size, according to a story in the International Finance News, also operated under the People's Daily.

Yesterday, several mainland newspapers, including the Beijing Times, Beijing News and Nanfang Daily also addressed the issue of smaller packaging, noting that Coca-Cola and PepsiCo had both reduced the size of their bottles from 600ml to 500ml while keeping prices the same.

Coca-Cola told the Nanfang Daily that its decision took into consideration a few factors, including the preferences of consumers, environmental protection and production costs. The paper also quoted PepsiCo as saying that its decision was made after a 18-month survey showed that consumers prefer smaller packages.

And beverage companies are not the only ones cutting sizes. Servings of rice, vinegar and soy sauce are also reportedly getting smaller. But some analysts are crying foul.

The Beijing News quoted Qiu Baochang, leading legal counsel for the China Consumers' Association, as saying that such 'disguised price rises' could deal a blow to consumer confidence in those brands and products. Any attempt to raise prices by underhanded or deceptive means, although not illegal on the mainland, would inevitably prove detrimental to a company's image and undermine its corporate responsibility to the public, he said.

Other companies have opted to raise prices, with some saying that such action is the result of more expensive ingredients or supplies.

Food prices exert considerable weight on the overall consumer inflation index in official statistics. In the past few weeks, the central government, especially the National Development and Reform Commission, has been busy summoning companies and industry associations for talks to ask them to delay their plan to raise prices.

The international daily goods producer Unilever was summoned by the commission early this month after revealing its would-be price changes to the market. The plan was aborted afterwards, but the company was still fined 2 million yuan (HK$2.4 million) for releasing sensitive information and for allegedly causing panic-buying in some places.

The level by which complaints about mainland food prices rose, year on year, in the first quarter: 8.7%