All Gold puts the squeeze on Consumers

2011-02-01 00:00

CONSUMERS are finding it hard to swallow the recent decision by Tiger Brands to fiddle with the packaging of All Gold tomato sauce.

The distinctive glass bottles in which this popular condiment is sold have recently shrunk in size. From October 1 last year, the big bottle has contained 700ml tomato sauce instead of 750ml, while the smaller one “slimmed down” from 375ml to 350ml on January 24.

Shrinking is an old marketing practice, said Professor Nic Terblanche of the University of Stellenbosch’s enterprise management department.

He said manufacturers who increase prices because of rising costs run the risk of losing their customers.

From the manufacturer’s viewpoint it is safer to reduce the size of the product and continue selling it at the “old” price. But this would not prevent the food producer having a problem when consumers discover the practice.

According to Tiger Brands head of marketing Brenda Koornneef, it was a difficult but necessary decision to reduce the size of All Gold bottles.

She said the prices of tomatoes and glass, the two most important input costs, have recently risen steeply.

Over the past two years glass had become 35% more expensive.

This price increase was because of the rising costs of soda ash and electricity.

She said the company had initially absorbed the rising costs. But prices had reached a level where this was no longer possible.

Although All Gold was a strong brand, Koornneef said, consumers are very price-sensitive. The company therefore decided to make the bottles smaller.

According to Nick Tselentis, a member of the South African National Consumer Union, the law stipulates that certain “sensitive” products should have a prescribed mass or volume. Such sensitive products include bread and toilet paper.

But tomato sauce is not a sensitive product, and the manufacturer therefore has some room to man­oeuvre in changing the product’s volume, he said.

Although consumers are naturally price-sensitive, they should not stare blindly at the shelf price of the products. They should work out what they are paying per gram or millilitre.

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