Eggs are crushed on the kitchen counter of Thomas Andersen in Tønsberg. But the omelette he usually cooks from Eldrorado farm eggs doesn’t taste as good after the last shopping trip at Kiwi. – I think it was something different then. The package was smaller. I bought it now anyway, because it was the package I was supposed to have, he says. When he got home he went through the receipt from the week before. The price of the eggs had increased, and the carton had shrunk from 18 to 12 eggs. – Then I simply felt both deceived, and then a little annoyed and a little pissed off actually. It is not often that I resort to social media, but then I posted on Facebook and asked what kind of shrink inflation is this here, he says. This is how the package of Kiwi’s own Eldorado eggs has shrunk. Photo: William Jobling / news Tricked up the price by 74 per cent Kiwis have more control over the price of the Eldorado eggs than other products, because the brand is their own. So how much has Kiwi actually increased the price of eggs? news’s price mapping shows that one of Norway’s largest grocery chains has carried out a violent price jump in a few months: In June, 18 Eldorado farm eggs cost NOK 32.90. On 1 July, the price increased to NOK 37.40. In September, the price rose again to 37.90. But now the package had also shrunk to 12 eggs. The price per egg has thus increased from 1 kroner and 82 øre to 3 kroner and 16 øre. This amounts to a price jump of 74 percent. Customers have reason to feel a little deceived by Kiwi’s price manipulation, says economics professor Tor Wallin Andreassen at the Norwegian School of Economics: – They use a phenomenon called the “barely noticeable difference” phenomenon from psychology. And it is precisely about the customer not noticing it. In other words, the chocolate has been made a little smaller, the packaging a little thinner or the number of wipes on a twelfth roll a little fewer, he says. There are several examples of the “barely noticeable difference” phenomenon also abroad. In the US, Kleenex slimmed down its boxes from containing 65 to 60 tissues this summer. Photo: JUSTIN SULLIVAN / AFP The aim is to make more money from the goods sold, without informing the customers that the goods have in practice become more expensive. – For the companies that sell tons of one and the other, this is a lot of money for them that they save because they can deliver less for the same price, says Andreassen. Kiwi also changed cartons But Kiwi has another, and perhaps even more complicated, explanation for the reason for the shrinkage: Kiwi’s own brand Eldorado with 18 eggs cost less per egg than the package from another own brand, the First Price cartons of 12 egg. – We have a tradition of selling First Price in our largest packs of eggs, and have worked to get First Price in 18 packs of eggs. When we got it, we chose to change the package of farm eggs from Eldorado to a 12-pack, says communications manager Kristine Aakvaag Arvin. Communications manager Kristine Aakvaag Arvin at Kiwi. Photo: Kiwi Kiwi has therefore gone from selling 12 small eggs under the First Price brand and 18 medium to large eggs under the Eldorado brand, to changing the cartons and contents. They have gone from selling two packages of eggs cheaply, to raising the price of one considerably, while the eggs from First Price have increased less in price. If we disregard the fact that the First Price eggs are smaller, the cheapest Kiwi eggs now cost NOK 2.08 per piece compared to NOK 1.82 in June. – Farm eggs from Eldorado had an artificially low price. It was sold at a significant loss, and it is not sustainable over time. – You tend to say that Kiwis never give up on price, but here you gave up the eggs, didn’t you? – We still have the cheapest eggs, both the Eldorado size and the cheapest eggs from First Price, she says, referring to the competitors’ pricing, which is roughly the same. – But not in relation to what the eggs cost? – It was an artificially low price over a long period, and it is not sustainable to sell at a loss over time. Andersen is not impressed by Kiwi’s explanation, which he also received on Facebook. – Both Eldorado eggs and First Price eggs are Norgesgruppen’s own products. I think these are just excuses, says Andersen. – Misleading customers Food prices are increasing at the fastest pace in almost 40 years, according to Statistics Norway. More customers have become price conscious, and go for the cheapest brands, according to Kiwi. Nevertheless, Andersen in Tønsberg is one of the few who has complained about the eggs, according to Kiwi. And that is also the intention from the company’s side, according to NHH professor Andreassen. He believes that customers are left unable to understand what is going on when prices often fluctuate in different ways: The customer should be confused about what a product costs, so that prices can be set higher on average without triggering a customer storm. – When both the packaging changes, the contents change, the prices change, it is chaotic and difficult to keep track of. I would therefore say that customers are deliberately misled into choosing something that is good for the company, but not good for the customers, says Andreassen. Economics professor Tor Wallin Andreassen has followed the grocery market as a researcher, and quickly recognizes the Kiwi egg experiment from economic theory. Photo: CHRISTIAN LURA / news Arvin disagrees that Kiwi uses the tricks from the economics textbooks to make more money. – All products are marked on the shelf both with price per kilo and unit price and this is clearly stated on the package, she says. – Have you tried to confuse the customers about what the goods should cost in order to set a higher price on average? – No, by no means. We live off satisfied customers and want full transparency about our prices. We are proud of our prices, she says. Norway is overflowing with eggs In recent years, Kiwi’s suppliers have raised the prices of eggs far less than other goods. Norway is struggling with severe overproduction. This year, 500-600,000 kilos of eggs can go to animal feed because the production is higher than what Norwegians get, Nortura Totalmarked informs news. – When I hear that in addition, I think it’s a crisis. We should rather do something to get rid of the eggs and get people to eat them, says Andersen, who himself eats a lot of eggs. Several farmers have got hens, and Norwegians are unable to eat as many eggs as the hens lay. Photo: Fredrik Varfjell / NTB Why Kiwi didn’t leave the price unchanged to provide assistance to the farmers, explains Arvin as follows: – Now you are starting from a product that has gone up, and it had an artificially low price. If you look at the entire product category of eggs at Kiwi, prices have fallen by 5.7 per cent so far this year, compared to the same period last year, she says.
ttn-69
Kiwi raised the price by shrinking egg cartons: – Felt cheated – news Norway – Overview of news from different parts of the country
