Friday, May 23, 2008
Can You Afford a Coke?
I will admit to having been more than a little skeptical lately about all the hysteria over the "soaring" cost of food. While there's no doubt that the prices of certain products such as milk and beef have gone up considerably in recent months, in general most food in the United States is up a only moderate amount (a few percentage points over last year). I am well aware that in underdeveloped countries food prices are indeed a big problem right now, but I've been fairly unconcerned about things here on the domestic front and quite unsympathetic to the moans and groans of aggreived middle class shoppers (so don't buy the Hot Pockets, already!)
But that complacency is starting to change.
For starters, I'm starting to come across more and more hard-hitting journalistic efforts like this one from WJRT in Flint, which must have the folks in central Michigan about to go out of their minds with fear. Ace investigative reporter Lori Dougovito has uncovered this shocking fact: your Memorial Day picnic this year is likely to cost--hold your breath--six percent more this year than last. That's right, SIX percent. Which means if you spent $80 last year on burgers and beer for you and your friends, this year you are going have to shell out $84.80.
Think about that. I mean, really, who can afford to even have a cookout this Memorial Day? (Darlene Martin, shopping with her $100 Bluetooth cellphone headset firmly in place, is having to "forego some of the conveniences this year", but she is bravely soldiering through. My favorite part of the whole segment, though, is Dougovito's live upclose interview with a rusty grill. I think she's got that Local News Emmy in the bag.)
The kicker came yesterday at work. I strolled past the Coke machine and noticed out of the corner of my eye . . . holy crikies! A twenty ounce bottle of Coca-Cola, which had been pegged firmly at $1.00 for years, is now . . . $1.10! I am a whiz at math, so I took out a pad and pen and in a few short minutes had calculted that this amounted to precisely a 10% increase.
But, really, it is much, much more than a 10% increase, both for the psychological and logistical barriers it makes to the sale. Ever since Coke machines started accepting dollar bills, there really wasn't a significant difference between a Coke that cost 85 cents or 95 cents or even a full dollar. You take the dollar out of your wallet, slide it in the dispenser, wrestle with it whizzing in and out about eight jillion times, fold it, unfold it, turn it around, smooth it out, reinsert it, then finally get your big 20 ounce bottle of cola. Maybe you got a dime or a nickel back or maybe you didn't, but who really cared. Want a Coke, you need a buck. Don't have a dollar? No problem. It's really easy to ask someone, "Hey can I borrow a buck so I can get a Coke?"
But now . . . if you are like me and don't carry change frequently, you now have to have two dollars in your wallet in order to acquire a Coke. And, even though you'll get ninety cents back after the purchase, psychologically it still feels an awful lot like you just spent two dollars for a Coke, and that's just not right. And good luck hitting up your buddy for a dollar and ten cents to get a Coke. He's not going to be carrying around a bunch of dimes either, so you are now basically asking to borrow two dollars.
So, this in my mind is something of a watershed event. The last time we saw such a barrier broken was back in the late 20th Century (seems so long ago, doesn't it?) when that magic fifty-cents-a-Coke barrier was broken. If you recall, Coke machine prices eased up gradually from twenty-five cents a nickle at a time until they hit fifty cents, then they stuck there for years, since two quarters was a nice psychological barrier. And do you remember what happened after the barrier was broken? 65 cents or 70 cents was an odd price to pay, so all of a sudden you saw Coke machines switch from 70 cents for a 12 ounce can to $1.00 for a 20 ounce bottle (a 66% increase in size, for those counting at home). The increased volume has caused some health advocates to accuse the soft drink companies of conspiring to make Americans fat (like we need any help!), but the truth of the matter is that is was all forced by the psychology of cost.
And so I predict that you will see another change coming very soon. The $1.10 Coke just doesn't seem to offer much value, and you're digging into your wallet for two bills already. Any day now we will see the advent of the liter-bottle Coke machine, where for two dollars even you get a big honkin' 33.8-ounce bottle of tasty Coca-Cola. Your waistline won't thank you, but your brain will think you're getting a screamer of a deal.
You heard it here first.
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