Are we being ripped off over soft drink prices ?

I went to the shop earlier to buy some cola (I'm not bother which brand). But I was astonished at the price we are being asked to pay for small amounts of drink.

I went to but a 500ml bottle and the price was 90 pence (or 2 for £1.60). But a 1 litre bottle of the same brand was 65 pence. So I was being asked to pay 25 pence more for half the amount or if I bought two bottles of the 1/2 litre bottles I could pay 95 pence more than it costs to buy a one litre bottle.

The pricing policy seems to be set to rip off the younger market who will buy a 500ml bottle but not a one litre or 2 litre bottle. This price differential seems to punish people exponentially for buying what they need and not buying to excess. I understand that there are economies of scale, but it should not cost 25 pence less to produce twice as much.

The next time the OFT are investigating pricse in supermarkets and price fixing by major brands perhaps this should be investigated.


Stu said...

I don't see why you suspect foul play. Seems like a perfectly sound pricing strategy on the part of the manufacturer and the shop.

The thing to remember is that the cost of production bears absolutely no relation to the price of the item. The price of an item in the shop is always exactly what most people are willing to pay for it. Many people are willing to pay extra to have the convenience of a smaller bottle of drink, and so small bottles cost that much more. Larger bottles are less in demand, probably because they are harder to carry and public loos are sparse enough that most people can't get through a litre of pop whilst on the move. In order to entice a few more people into buy the large bottles, the prices are accordingly lower.

You could say people are 'punished for consuming less', but it would be more accurate to say that people choose to pay extra for the convenience value of a small bottle. Alternatively, you could say that shrewd observers such as yourself are rewarded for buying the larger, better value bottles.

Vicki said...

Stu is right.

Anyway, you don't have to buy what they are offering. If you are not happy with the price you can choose not to do exchange with them, rather than running home to mummy and asking her to make them play with you on your terms.

Gallimaufry said...

If there is a choice of shops, or perfect competition, then Stu's point that the price is always exactly what most people are willing to pay for it stands up. But when there is only one shop then the economics of take it or leave it are in play. How droll if young consumers bought litre bottles, drank half and left the half-empty bottles in the shop for the shopkeeper to dispose. Far be it from me to counsel such a course of direct non-violent action or reverserse market research - but it might work.

dazmando said...

I noticed that in supermarket you can nolonger get the 1.5 litre bottles and there is less size choice than there used to be. This means your forced to get cans as the bigger ones go flat. B@$t@rt$

alistair said...

sorry to be a little late in commenting on this, but its even worse when you go out for dinner. In most pubs/restaurants the price of a pint of a pint of coke is not far behind that of beer. Most pubs use the machines which make coke for a few pence a pint. The rest is profit. When I was on the committee of the local conservative club it made by far the most money. The difference between the profit on soft drinks and beer is huge. Well that`s my rant over for the day

Barbara said...

There is an unholy profit margin on these tooth-rotting soft drinks, but in a free market an opportunity for someone to undercut.