An Amazing Example of Efficiency and Value, by Victor Niederhoffer
The local Stew Leonard's sells a 12 pack of 12 ounce canned Coke for $2.40. That's 20 cents a soda, about what I paid 40 or 50 years ago for a bottle. When one thinks of the many steps involved in getting that Coke to the customer, the cans, the filling, the packaging, the transportation, the printing, the sealing, the advertising, the warehousing, the refrigeration, that's an amazing example of efficiency and value showing many things, e.g. that there's incredible competition in the world, and that even the most branded and famous of all products, can't escape from substitutes and the inexorable decline of commodities and commodity type products and formulations to a Julian Simonesque 1% a year increase in price.
J. T. Holley replies:
Furthermore it's a testament to the traders/hedgers of KO who have been able to hedge the costs even when they vary from that normal 1% a year increase.
- Corn - ingredient (part of the secret formula)
- Sugar - ingredient
- Petroleum - two-liter bottle; transportation
- Aluminum - six pack cans
- Paper - containers
- Dollar - conversion from foreign currencies
- Rates - financing manufacturing plants
All to keep the price the same.