Oct 9th, 2008 at 12:48 pm
Soda Yield-Curve Inversion
In the latest sign of the growing economic crisis, soda prices are on the rise at the machine in the CAP 10th floor kitchen. Specifically, a twenty ounce bottle of Diet Coke that used to cost $1.00 now costs $1.25. Interestingly, however, the price of a twelve ounce can has stayed flat at $0.65. I made a chart illustrating the per-ounce implications:
Strikingly, the volume discount has gone away and been replaced with a volume penalty, surely the result of some kind of chaos in the soda markets. We need a bailout!
42 Responses to “Soda Yield-Curve Inversion”
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October 9th, 2008 at 12:52 pm
The curve gets even weirder if you extend it out to 2L, which is now frequently cheaper than 20OZ.
This suggests that what you’re really doing is paying a premium to be able to carry around a relatively large amount of Coke, but still be have a bottle that is reasonably one serving.
October 9th, 2008 at 12:56 pm
Good going, genius. Now you’re just going to convince them to raise the price of cans.
October 9th, 2008 at 12:58 pm
I was buying dog food the other day and the smaller bags were on sale and cheaper per ounce than the really big bag. It was crazy!
October 9th, 2008 at 12:59 pm
Diet Coke tastes better from a can. Mmmm, aluminum.
October 9th, 2008 at 1:04 pm
There’s a “Green Tea with Citrus” drink which is available in all the stores around here in the smaller bottle for 1.39 or the larger one for 99 cents.
Clearly there is a specter haunting the beverage business, as so many other things.
October 9th, 2008 at 1:04 pm
True. I’ve noticed at my local Bottle King the price for a 20oz has gone up from 95 cents to $1.06. Now, granted the 95 cents price was about 25cents lower than any competitor, but it still made the 11cent increase no less painful. The annoyance/inconvenience level has risen dramatically as i now have to use two 1$ bills to purchase a 20oz and am left with the annoyance of having to carry 89cents in my pocket, when in the past i could simply get by with using only one bill and be left with a single nickel. I could of course use exact change, but that simply isn’t going to happen.
October 9th, 2008 at 1:09 pm
Unfortunately this does not help those of us who drink Cherry Coke Zero, available only in the 20oz size.
October 9th, 2008 at 1:13 pm
Those look suspiciously like Clinton era soda prices to me.
October 9th, 2008 at 1:14 pm
I’ve always found bottles a better deal because of the recap-ability factor.
October 9th, 2008 at 1:17 pm
Are these expressed in real dollars?
October 9th, 2008 at 1:18 pm
Might be a simple issue of supply and demand.
Since you’ve got there, consumption has trebled, so prices go up.
I think it’s a waist band/price correlation
October 9th, 2008 at 1:18 pm
Are you certain it’s a “penalty”? Rather than thinking of this as a penalty for the larger size, perhaps it’s an incentive to buy the healthier (or, to be accurate, less un-healthy) size, and the extra quarter for the 20 ounce size goes towards building a better on-site gym there at CAP?
Howdy to Brad Johnson as well!
October 9th, 2008 at 1:19 pm
Its worse than you think. I own a credit default swap on the CAP vending machine. As these soda inefficiencies come to light, the value of my CDS is plummeting. Condsidering the highly leveraged nature of my vending-CDS portfolio, its wreaking havoc on my balance sheet. Don’t even ask about the counterparty fallout that would arise from my insolvency. I better get the Treasury on the phone.
October 9th, 2008 at 1:19 pm
Forgive me if this is already obvious to all, but clearly, now that they’ve got everyone used to buying the 20oz bottles (in a lot of places, such as my company cafeteria, the can is long gone), they can jack up the price and we’ll all just keep buying them. And fletch3r, don’t even get me started on dog food prices…
October 9th, 2008 at 1:27 pm
Rising oil prices making plastic more expensive? Same with the packaging on dog food?
October 9th, 2008 at 1:31 pm
This is the single most brilliant thing that Matthew Yglesias has ever written.
.
October 9th, 2008 at 1:31 pm
The same thing happened with bottles of Leffe at my local off-licence when I lived in North London. The 333ml bottles were cheaper by volume than the litre bottles.
October 9th, 2008 at 1:33 pm
Matt, you’re missing out on a golden arbitrage opportunity here! Just stock up on cans and use the Diet Coke therein to fill 20 oz. bottles. Lever it up 50 to 1, and you too can be a Master of the Universe!
October 9th, 2008 at 1:39 pm
If there were one widely consumed product I could do away with with a snap of my fingers, it’d be soda. The carbon footprint is huge, the solid waste equally enormous, and the health problems associated with soda (cavities, diabetes, obesity, caffeine-related issues) are becoming more prevalent and costly.
But no. We need our brown, carbonted sugar water to maintain our energy so we can click our mice and punch keys and get to work on time. Yay.
October 9th, 2008 at 1:43 pm
For some unknown reason, the price per roll of Scott toilet paper is higher in a 20-pack than if purchased individually.
October 9th, 2008 at 1:48 pm
This is probably the most coherent chart Matt has produced yet. Keep it up!
October 9th, 2008 at 1:56 pm
In my part of Mississippi, a 12-pack of Coke costs $4.27 or so at Wal-Mart.
When gas was pushing $4, the gas stations started selling 12-packs “2 for $6″ or thereabouts, presumably to lure people in.
Now that gas has dropped ($3.40 around here), I went in yesterday & saw that 12-packs are 2 for $8.
– Relevance to MY’s post? Um, both about Coke?
October 9th, 2008 at 2:00 pm
This post made my day. And I notice he called it “soda,” thus proving his bonafides to a Northeast Wisconsin guy such as myself.
October 9th, 2008 at 2:05 pm
It may still be true, but I remember when brown rice, which is a virtually unprocessed commodity, cost more than white rice. You paid more to have the company not do something.
October 9th, 2008 at 2:08 pm
65 cents for a can?
4 coins is not change we can believe in.
October 9th, 2008 at 2:16 pm
thus proving his bonafides to a Northeast Wisconsin guy such as myself.
Milwaukee and St. Louis are notoriously soda redoubts within the pop belt, and I guess that NE Wisconsin is within Milwaukee’s sphere of influence. (To be fair St. Louis is on the pop-coke border.)
October 9th, 2008 at 2:20 pm
this is bizarre to me. during my high school career (00-04) the price of a 20oz soda from the vending machines rose from $1 to $1.25, as it did around town in long island. then i went to college in hanover nh, and every vending machine again sold it for $1.25. now in my apt in silver spring it costs $1.25, and the cans in my office cost $.75
if you were getting 20oz bottles for $1 until today, you’re really lucky.
October 9th, 2008 at 2:23 pm
In my part of Mississippi, a 12-pack of Coke costs $4.27 or so at Wal-Mart.
Damn! I live in Southern California where housing costs 3 times as much as in Mississippi, but at least there are enough grocery stores competing that there’s usually a sale somewhere to get 12-packs for $3.00 – $3.50, especially if you’re willing to switch from Coke to Pepsi or vice-versa depending on what’s on sale.
October 9th, 2008 at 2:27 pm
I should point out that around L.A. City Hall, where I work, the only place to get cans of soda for less than a dollar are in the 65-cent vending machines in the basement of City Hall East, next to the motor pool. I figure this limits me to one can a day, though, so I guess it’s not that bad.
October 9th, 2008 at 4:32 pm
There are only two things (that I’ve discovered) that are cheaper in LA than in Portland (Oregon). 12-packs of diet coke (when I was at the market last weekend, a 12-pack was $6!) and mani/pedis. I’m not sure if these are in any way related, but I’d love a $3 12-pack of Diet Coke and a $20 mani/pedi right about now.
October 9th, 2008 at 5:52 pm
Speaking of soda and L.A., since moving to Chicago, I’ve really come to miss Cactus Cooler.
October 9th, 2008 at 7:42 pm
It’s getting to be pretty stupid to assume that the larger size of anything in a grocery store is a better value. What happened to supply and demand VOLUME VOLUME VOLUME? It’s looks like the laws of economic physics have stopped working.
October 9th, 2008 at 8:26 pm
Why don’t you just buy your coke at the Grocery store?
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