Back in April of 2021, I wrote in these pages about two economists, Laurence Summers and Paul Krugman, who had diametrically opposed views regarding the threat of inflation. Summers predicted it was coming; Krugman (and virtually all of the world’s central bank chairs) pooh-poohed the idea.

I thought Summers had it right ⁠— and, unfortunately for our wallets, he did.

Having lived through the 70s and 80s, I’ve seen this movie before. And I am seeing a repeat of some of the distortions created by rapidly rising prices.

For example, there is a phenomenon called “shrinkflation.” This is when a company tries to maintain the same price for something but shrinks the amount you get. Everything, from the number of sheets in rolls of toilet paper to the size of your favorite candy bar, diminishes.

My favorite example is Wheat Thins, the crackers made by Nabisco. They recently reduced their “family size” box from a pound (16 ounces) to 14 ounces. While it is true that the size of the average family is also shrinking, this is not about demographics ⁠— it’s about profit.

There are also car payments. These were once denominated monthly, then bi-weekly, and now weekly. What’s next? Hourly?

Another big issue is product substitution. This happens when people get fed up with rapidly rising prices and switch to a supermarket house brand or a “no name” product.

Back in the 80s and early 90s, I was doing some consulting work for Coca-Cola. At the time, they were obsessed with product substitution. For Coca-Cola, going toe-to-toe with Pepsi was one thing. Fighting it out with a competitor with a markedly lower cost structure was something else again.

Coca-Cola was particularly concerned about Cott Beverages, a Montreal-based firm founded by Polish immigrants in 1923. If you went to the Crane Beach store in the 50s, 60s, or 70s, you’ll remember Cott ⁠— it was the only tonic (translation for non-Ipswich readers: ”soda” or “pop”) they sold. The company’s slogan was, “It’s Cott to be good.”

In reality, away from Crane Beach, most consumers seldom knew they were drinking Cott cola or the company’s other carbonated beverages ⁠— they were sold under various store brands, like President’s Choice, Master Choice, or America’s Choice.

Cott was clever when it came to cola ⁠— they obtained a license from Royal Crown to use their formula. In taste tests, their product didn’t outperform Coke or Pepsi but was deemed okay enough by many.

So what did Coke do? Lowered their price only a little ⁠— and upped their marketing budget by a lot.

They cemented brand loyalty by transporting consumers to hilltops in Italy to “teach the world to sing” and strengthened their ties with sports and entertainment franchises. And it mostly worked.

Which brings me to ask a question: Are you loyal to certain brands, even in this time of inflation? Or will you flee to lower-priced house brands and/or cheaper competitors?

Here are some random examples of where I am stubbornly brand loyal:

Ketchup: Heinz. I accept no substitutes. And restaurants that pour another brand into used Heinz bottles feel my wrath on social media sites.

Mustard: Kosciusko. As best I can recall, I first tasted this brand at a Polish picnic. Ended my rocky relationship with French’s. 

Mayonnaise: Hellman’s, come hell or high water.

Orange juice: Tropicana. Once you leave frozen for fresh, you never go back.

Beer:  Sapporo. First had one at a beer garden in the city of the same name. Germany’s gift to Japan.

Light beer: Michelob Ultra. My grandfather knew a guy who knew Gussie Busch.

Brats: Johnsonville. As a proud Wisconsin Badger, brats are an essential food.

Runners (sneakers, to the Americans): New Balance. Not that I actually run, but they fit. And the company is Boston-based.

Cars: Ford. Met my spouse while we both worked there. But I liked it better when Ford owned the Jaguar, Volvo, and Land Rover badges.

Clams: Ipswich. Forget cherrystones, quahogs, or geoducks. I only consume clams at places where I see a blue-and-yellow Ipswich Shellfish truck making deliveries. And I am apparently ridiculously price-insensitive (or so my spouse tells me when I suggested taking out a second mortgage). 

And, finally, soft drink: Coke Zero. Unless they engage in shrinkflation. 

Bob Waite would be interested to know if readers are loyal to particular brands despite inflation. You can reach him at bob.waite@senecacollege.ca. Read more of his columns here.