Upflation
“Upflation” is the New Trend to Charge Us More for Less
“When I was a little girl, chocolate bars only cost a nickel.”
My grandmother would scoff at the price of a Hershey bar in the grocery store. She was a product of the Great Depression. I remember cans of coins hidden in her pantry among the peas and carrots. I was her co-conspirator. She’d let me put her change in them and told me not to tell anybody.
She was cost conscious about everything. I still have habits I picked up from her. That’s why this period is so alarming to me.
I was shopping in a big box store the other day, picking up necessities – toothpaste, deodorant, and shaving cream, among others. And I was shocked at the prices. But what was truly odd were the prices of Old Spice deodorant.
There are half a dozen choices with wildly different prices. A quick online search will show you what I mean:
The latest versions with fancy new labels and exotic smells, cost nearly twice as much as the “classic” version. And they contain less product! The classic is 3.25 ounces, the Pure Sport is three ounces, and the Sweat Defense is 2.6 ounces.
That led me to discover a new term: “Upflation.” A recent Bloomberg article describes that trend, particularly in the personal care and beauty market. From the article:
Packaged-goods giants kept revenue up for years by raising prices and reducing package sizes, a practice known as ‘shrinkflation.’ But consumers only tolerate that for so long before seeking out alternative solutions. In some cases, shoppers are trading down to cheaper options, like Amazon’s in-house brand, Amazon Basics. Others are buying fewer essential items altogether. To win those people back, companies have come up with a fresh tactic: ‘upflation,’ an attempt to create new applications for things consumers have decided they no longer need as much of — and upcharging for them.
Here’s the thing, Old Spice’s maker, Proctor, and Gamble (NYSE: PG), didn’t suffer during the post-Covid inflation. In fact, they prospered. Here’s their annual financial data (from Finance.Yahoo.com):
As you can see, their revenue grew from $76.1 billion in 2021 to $84.0 billion in 2024… 10% growth. However, Gross Profit grew from $39.0 billion in 2021 to $43.2 billion in 2024…11% growth over the period.
That means during this period of high inflation, not only did P&G not lose money, but they also grew earnings. As an investor, we can admire their ability to get us to pay more for the same stuff, even as money got tight.
But as a consumer, I’m thinking hard about buying their products anymore. And that’s my right. Every dollar we spend is a vote. If I continue to buy P&G products, I condone their actions. That’s what makes a market.
And I’m not alone, as you can see in the chart below from the same Bloomberg article:
And while I’m picking on P&G here, many of the big consumer products companies did the same thing.
The lessons I learned from my frugal grandmother are coming home in a big way today. Sadly, this younger generation will have to learn to do more with less on their own.
For the Good,
The Mangrove Investor Team
Numbers You Need to Know
0.2 Percent
In October, the Consumer Price Index for All Urban Consumers rose 0.2 percent, seasonally adjusted, and rose 2.6 percent over the last 12 months, not seasonally adjusted. (US Bureau of Labor Statistics)
25.61 billion
1888
Mum, the first branded deodorant to hit the American market, was patented in 1888. It is still sold today although its formula has changed. Initially, Mum was sold as a waxy cream that users rubbed into their armpits. (National Museum of American History)
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