Click to enlarge.
I've taken the consumer price index for carbonated drinks and adjusted it by the overall CPI. The chart shows the average real price increases over the previous 5 years.
Here's why I was curious.
I moved to Seattle in 1988. I remember thinking it was a really good sale if I could buy a 6-pack of Coca Cola for $1. When it reached that price, I backed up the truck.
As recently as 2004, I remember thinking it was a really good sale if I could buy a 12-pack of Coca Cola for $2. When it reached that price, I backed up the truck.
16 years had passed but I was still buying Coca Cola at that same price. You can see the effect of that in the chart. Carbonated beverages were not keeping up with inflation.
As seen in the chart, those days are over. My Coca Cola supplies have dwindled to nothing. It might very well stay that way. This week's sale is $3 for a 12-pack. I'll pass. We do have an ample supply of Dr. Pepper though (purchased at Costco recently with one of their in-store coupons).
Coca Cola is really pushing their luck, at least with us.
The company hopes its smaller, cheaper packages will appeal to consumers on tight budgets.
Yeah, well, good luck on that one. Everyone on a tight budget should be thinking in terms of dollars per ounce. Smaller packages are generally not the way to save money.
Stubborn people on tight budgets should look at Coca Cola's 27.59% profit margin during a period of high unemployment and decide for themselves if that is something they wish to support.
I find myself drinking more Gatorade lately (Pepsi product). The container costs about $10 (at Costco and/or Sam's Club) and makes 9 gallons (the equivalent of eight 12-packs). It doesn't pack the calories and high-fructose corn syrup rush of a soft drink, but that's actually a good thing.
Source Data:
BLS: Consumer Prices
St. Louis Fed: CPI
I always preferred water over soft drinks. Cuts out all the profit for both Coca Cola and Pepsi Co. and has a health benefit as a plus.
ReplyDeleteFrom my viewpoint softdrink companies aren't really consumer staples but consumer discretionary.
Soft drinks would probably be a lot higher without massive government subsidies.
ReplyDeleteThe subsidy programs give farmers extra money for their crops and guarantee a price floor...Corn is the top crop for subsidy payments.
Soft drink makers don't have to bear the full costs of their ingredients. I still buy a lot of Coke products. Price would have to go way up for me to break that addiction.
"I find myself drinking more Gatorade lately..."
ReplyDeleteYou just jinxed Gatorade. Now it will go up the way Coke did.
Do me a favor, don't start eating Cheez-It snack crackers, they are already expensive enough as it is. LOL!
"From my viewpoint softdrink companies aren't really consumer staples but consumer discretionary."
ReplyDeleteGood point. When you think about it you could make the same case for Wal*Mart. I mean, the grocery and drug store portions of WM represent only about 25% of the store. Staples shoppers don't need the electronics, toys, and cheap Chinese furniture.
I just bopped into Costco today, prices were ~30c per can.
ReplyDeleteSame price as Safeway when they run those buy 2 get 2 specials.
TBH, the utility of two cans of Splenda Diet Coke is worth 60c to me, easily.
What I do is freeze one can as ice cubes and then pour 1 1/2 cans over the resulting ice cubes (the remaining half can gets poured back into the ice cube tray to make more).
Soooo good. Splenda Diet Coke is god, but it does have a very weird aftertaste. Not immediately, but it tends to hang around as an after-aftertaste.
But for my diet I've been soda-free since May.
Anonymous,
ReplyDeleteI'm told crack is consumer discretionary too. They just don't put crack vending machines in schools yet, lol. Sigh.
Joke! Um, partly.
Mr Slippery,
ReplyDeleteCorn subsidies and food stamps for all.
The more you eat the more you save!
Fritz_O,
ReplyDeleteYou are safe. I will NOT mention Cheez-It on this blog. Oops. I just said Cheese-It. @#%$! I did it again. ;)
Troy,
ReplyDeleteMy diet is stagnating in November so far. Leftover Halloween candy, a steady supply of brownies and cookies from my girlfriend, and November's complete lack of yard work is taking its toll.
That said, I continue to climb an extra 20 flights of stairs each day. I'm still pleased with November's data if I seasonally adjust it, lol.
In all seriousness, there's at least one reason I started the weight loss plan at the beginning of summer. It is easier to form a habit with tailwinds rather than headwinds.
I offer our nation's debt addiction as anecdotal evidence to support my claim. Hello winter!
My threshold was $2.50 per 12-pack. When that was crossed I switched to 2-liters. Those are regularly discounted to $1 or $1.25.
ReplyDeleteI play the Coke points game, so if I run out between sales, I can get a stopgap with no out-of-pocket.
And I like flavors from both Coke and Pepsi, so I can flow with whoever has the current discount.
Trucking around bubble water annoys my sense of elegance. It costs a lot of money and real resources. I would consider the capital cost of a home fountain if I could get authentic syrups in appropriate quantities.
foxmarks,
ReplyDeleteMy threshold was $2.50 per 12-pack.
My threshold was $2 in 2004 (5 12-packs for $10).
It moved to $2.20 (5 12-packs for $11).
It moved to $2.40 (5 12-packs for $12).
It moved to $2.60 (5 12-packs for $13).
I guess it is $2.80 now. Until proven otherwise, it is not $3.00 though.
And I like flavors from both Coke and Pepsi, so I can flow with whoever has the current discount.
You might get a kick out of my GDP Deflator example. Like you, I am more than willing to substitute where possible (without my life being infinitely ruined ;)).
Trucking around bubble water annoys my sense of elegance. It costs a lot of money and real resources. I would consider the capital cost of a home fountain if I could get authentic syrups in appropriate quantities.
I hear that!! I would be all over the fountain and syrup idea.
There is one downside risk though. I worked in fast food once. One of the syrup containers broke open. The manager couldn't understand why it was taking me so long to clean it up. She watched me for a few minutes and then it made more sense to her. I spent more than an hour making root beer with a mop and bucket. Behold the power of concentrated soda mix! :)
I do like the GDP deflator. Food is food and soda pop is soda pop. If some fundamental quality and purity are maintained, hedonic adjustments are a product of branding. Pepsi is the Choice of a New Generation!
ReplyDeletefoxmarks,
ReplyDeletePepsi is the Choice of a New Generation!
Our economy smells like Fritos. It's going to the dogs. ;)
The salt will kill you though. Just drink water from the tap!
ReplyDeleteDoc Holiday,
ReplyDeleteSalt also keeps us alive. I'm not convinced one way or another what salt's direct link to heart disease is and I'm clearly not the only one.
07/06/2011
Salt-heart disease link questioned
In an article published in the American Journal of Hypertension , the researches identified seven studies involving about 6,257 adults with normal or high blood pressure who reduced the amount of salt in their diets. When they pooled the data to conduct a “meta-analysis”of the studies, the researchers found no clear evidence that cutting salt cut the chances of dying from heart disease or dying for any other reason, the researchers reported.
I do remember that we were once told to cut butter from our diets and replace it with margarine (high in trans fats). I wasn't convinced of that either. So much for that theory in hindsight. Butter was found to be much safer in hindsight.
So many things can kill us. It wouldn't surprise me if worrying about what can kill us is near the top of the list.
I worry about a lot of things, but at least I don't worry that much about salt (rightly or wrongly).
High fructose corn syrup? Prefer to avoid.
Trans fats? Go out of my way to avoid.
Salt? Indifferent until nearly proven otherwise.
It is just an opinion of course.
As a side note, I drink far more water than Gatorade so even if I am wrong about salt I still doubt it is a big deal.