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Big brands reducing size of their packaging

Big brands reducing size of their packaging
Big brands, such as Pepsi and L’Oréal, in China are reducing the size of their packaging in an effort to keep consumer prices from rising.

The smaller packages have been introduced while keeping prices steady, which could quell the Chinese government’s concerns about inflation in the country, where overall consumer prices were up 5.3% in April, driven by an 11.5% increase in food prices.

Both Pepsi and Coca Cola are shrinking bottle sizes for their beverages to 500ml from 600 ml, according to the WSJ.

“Size reductions in China are a way for companies to absorb cost increases without gaining too much attention,” said Torsten Stocker, a Hong Kong analyst for Cambridge, Mass., consulting firm Monitor Group. The changes are “at the level that doesn’t get noticed much by consumers.”

Pepsi kept its price to about three yuan (US$0.46) per bottle, said the Monitor Group. The smaller Pepsi bottle brings it in line with most carbonated soft-drink brands in China, said a PepsiCo spokesperson, the WSJ reported.

L’Oréal shrunk its Hydra-fresh facial moisturizer to 175 ml from 200 ml.

Concerned that inflation might stall economic growth, China has imposed price controls for a range of foods. Exceeding the country’s 4% inflation target, broad consumer prices were up 5.3% in April, with 11.5% of that from food prices, reported the WSJ.

Last month, Unilever SA was fined about US$300,000 for announcing increased prices in the media, with the government claiming that this caused consumers to buy and stockpile products.

Domestic and foreign consumer good companies operating in China must disclose their production costs and operating margins, ruled China’s National Development and Reform Commission (NDRF), which ruled that operating margins should be limited, said an executive familiar with the matter, the WSJ reported.

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