Kantaro Koiya and Daniel Leussink

TOKYO, Reuters – It was a chocolate biscuit which turned Masayuki, a self-confessed penny-pincher and sweet-toothed Japanese chronicler of “shrinkflation”, into a meticulous observer of Japan’s best practices.

After sabotaging Chocoliere tartlets for 10 years, Bourbon Corp cut the packages size. The newspaper delivery man turned part-time stock trader saw the same thing happen two years back and decided to take action.

Iwasa, 45, said “I was annoyed that they were shrinking” and added, “I was disgusting they were shrinking.” His website http://www.neage.jp (“price rises”) documents deceitful price hikes.

He currently tracks 400 items and services prices, from washing powder to tickets at Tokyo Disneyland. He devotes a lot of time to shrinkflation. When a product becomes smaller while the price remains constant, it is called shrinkflation.

Iwasa stated that Japan’s deflation has made it difficult for people to increase prices. Shrinkflation, therefore, is considered a last resort. I find it annoying and sneaky.

The practice isn’t unique to Japan, however. Mondelez International Inc (NASDAQ:) sparked a global outcry when it reduced https://www.reuters.com/article/us-britain-toblerone-idUSKBN1331L6 the size of the Toblerone chocolate bar in 2016 – its prevalence in the world’s No.3 economy is a notable legacy of years of deflation.

Companies have become wary of raising prices to avoid losing clients, as wages and consumer prices have barely changed over the past two decades.

This is a problem for policymakers who want higher prices as a key component of virtuous spending cycles that drive economic growth.

There are now signs that even Japan Inc may be nearing a tipping point, as soaring raw material costs and a weak yen drive up what companies pay for fuel, coffee beans and beef https://www.reuters.com/article/japan-economy-inflation-idCAKBN2H402I.

While only 14% of Japanese firms have so far passed on higher costs to customers, another 40% say they plan to, a recent Reuters poll showed https://www.reuters.com/world/asia-pacific/around-half-japan-firms-looking-pass-rising-commodity-costs-customers-2021-11-10.

However, food businesses are not willing to pay more, according to the survey. They fear losing shoppers.

Tsutomu Watanabe, an economics professor from the University of Tokyo, stated, “As raw materials prices increase, food producers would like to raise their prices, but it is hard for them to do so.”

Watanabe claimed that companies may not be open to price rises as in 2008. This was similar to what happened in 2008, during another commodity surge, and again in 2013-2014 when Japan’s yen plummeted. Stagflation, however, is still a viable option for protecting margins.

BACKLASH FOR CONSUMERS

Bourbon reduced the Chocoliere biscuits per 150 yen ($1.30/packet) to 14 in 2008, citing increased costs. Iwasa’s site uses announcements from companies, web archives, and other public information, to keep track of prices.

The packets were now 110.6g instead of 122.5g. Bourbon later reduced just under 1 gram each.

The company didn’t respond to our requests for comment.

Kameda Seika Co received criticism after it decreased the amount of peanut mixture and rice crackers in its “kaki pi”, by 5%, to 190g.

According to Reuters, a spokesperson for Kameda said that the reduction in size occurred because Kameda couldn’t offset rising transport and commodity costs by tightening their belts elsewhere.

Calbee Inc announced that some of its Jagarico potato sticks and potato chips will be reduced by about 5% beginning next month. It will also increase the prices for more than 12 potato chips products up to 10%.

Satoshi Yoshida, spokesperson for the snack manufacturer said that the decrease in sales was more popular than price increases.

“It is possible that customers have experienced a deceitful experience and may still have bad memories of the event,” he stated.

Lotte Co faced criticism last year when it revealed a renewed supply of Bacchus chocolates from Japan, but failed to mention that it had reduced the packaging to 10 pieces instead of 12, as reported in posts online.

Yuichi Nitanai, spokesperson for the company, confirmed that there was a reduction in prices but refused to elaborate.

Officials at the Ministry of Internal Affairs said that the government’s consumer price index includes smaller package sizes.

The impact of shrinkflation might not have been fully captured in the data, however, because the government index is more likely to be based on well-known brands. However, shrinkflation tends towards smaller, less known businesses, according to Watanabe, University of Tokyo.

He stated that “Top companies have a lot of pride” and didn’t like being seen doing things such as shrinkflation.

($1 = 113.3900 yen)