Competing on Price Alone Creates a Race to the Bottom
Most consumers have heard of shrinkflation—less quantity, same price. It is highly visible and easy to notice, especially now that everyone carries a smartphone, takes pictures, and collectively compares products online. Consumers have become far more vigilant.
Shrinkflation has long been perceived as a legal, yet deceptive, way to protect margins while quietly reducing value. But another phenomenon has been unfolding more discreetly, and most consumers barely notice it. It is called skimpflation.
This occurs when manufacturers replace higher-quality ingredients with cheaper substitutes while keeping prices relatively stable. Artificial ingredients replace natural ones. Cocoa butter is swapped for alternatives. Sweeteners, oils, fillers, and flavoring systems are reformulated to cut costs. Unless consumers closely examine nutritional labels and ingredient lists, these changes often go undetected. Yet the food itself has fundamentally changed.
For years, the food industry justified these adjustments as necessary responses to inflationary pressures, volatile commodity markets, and increasingly price-sensitive consumers. In many cases, companies believed shoppers cared more about price than formulation. That assumption may now be changing.
Change Is Afoot
A growing number of major food companies are quietly reversing course. Jell-O, the iconic gelatin brand known for its bright colours and highly processed formulations, recently announced the launch of Jell-O Simply, a product line free from synthetic dyes and artificial sweeteners. The new line also contains 25% less sugar than traditional ready-to-eat Jell-O products. More importantly, Kraft Heinz has committed to removing certified synthetic colours across its portfolio by the end of 2027, including in legacy Jell-O products.
The confectionery sector is experiencing a similar recalibration. Products formulated with cocoa butter substitutes are increasingly losing appeal among consumers seeking authenticity and better quality. Reports suggest that Hershey plans to return to more traditional chocolate recipes next year, while other manufacturers are exploring similar moves. Barry Callebaut, one of the world’s largest chocolate suppliers, has acknowledged that a full recovery in cocoa demand may still take several years, but the direction is becoming clearer: Consumers are paying more attention to what is actually in their food.
This shift is not driven solely by health concerns or marketing optics. Economics also play a central role.
Compete on Quality, Not Just Price
Over the last several years, many major brands diluted their value proposition through aggressive cost engineering. As formulations changed and quality perceptions deteriorated, consumers increasingly realized that lower-priced private-label products were offering a remarkably similar experience at a discount. In some categories, national brands effectively trained consumers to trade down.
That is a dangerous trend for the food industry. Competing exclusively on price creates a race to the bottom that rarely benefits anyone over the long term, including manufacturers, retailers or consumers. While affordability remains critical during a period of persistent food insecurity and household financial strain, the industry cannot cut its way to sustainable growth. Innovation, quality, trust, and product differentiation remain essential drivers of long-term competitiveness.
Consumers may accept smaller packages during difficult economic times. What they are far less willing to tolerate is the perception that the food itself has been quietly downgraded.
The recent return to simpler recipes, recognizable ingredients, and more authentic formulations suggests that many food companies are beginning to understand an important economic reality: Value is no longer defined solely by price. Increasingly, consumers are reassessing what they are actually paying for.
Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.
