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That doesn't explain why Coke continued to cost a nickel after WWII, when we started having significant inflation. According to the economists interviewed on Planet Money, Coke has the longest known stuck price of a consumer good in modern history.

They attribute it to the original mistaken fixed-price bottling contract, Coke's response of pushing the price down with "predatory" marketing of a 5c price point, and the rise of vending machines and their inability to make change until the late 40's.

The best part of this story, and I'll just go ahead and spoil it for you: late in this drama, Coke decided they wanted to raise prices, but since vending machines couldn't reliably make change they were stuck with a nickel-denominated price and couldn't double it. So instead, they stocked vending machines with "official blanks"; one in every 8 times you went to a Coke machine for a drink, you got an empty bottle, and had to pay again, which raised the effective price of Coke across all consumers by less than a cent.




So instead, they stocked vending machines with "official blanks"

In the podcast[1] they say that idea "never saw the light of day".

[1]: http://www.npr.org/blogs/money/2012/11/13/165046113/episode-...


Doh! Just re-listened. You're right. I missed that part the first time, and had instead heard "they abandoned the plan", and figured they might have actually done this for awhile.

It's still the best part of the story. Followed by the request for a 7.5c coin.


Followed by the observation, that for a 2 liter, the price per ounce is still remarkably close to the original price


Maybe folks were kinder to vending machines back then, but if I put in my last nickel and received a blank, that blank would have been used to thrash the heck out of the machine.


Maybe they should have raised the cost to 10c, and advertised that you get a bonus, second Coke 3 in 4 times.


I agree that some inflation occurred (my original comment noted the inflation that was ultimately experienced near the end of the 70 year period), and I agree that the article contains some interesting information about contracts and vending machines (I did read the article). I just think it's disingenuous to say basically "the price was the same in 1886, 1915 and 1930!" and that they don't remind the reader that the price of many things was essentially the same over that same time period.

A less informed reader may be unaware of this and be reading the article from the context of modern inflation, for which a 70 year history of no price change would be much more remarkable.


... the parent pointed out that CPI almost doubled in that period. The fact that the nominal price of gold held steady doesn't show a lack of inflation - that's also the period when the world started pulling huge amounts of gold out of South Africa, which would be expected to drive down the real price of it. Unless coke's secret recipe includes a lot of gold, that's not going to have much relevance.


Measurements of CPI during that time point are of more questionable accuracy, CPI measures many different types of goods (not all go up together), and a doubling of CPI over that many years is relatively low inflation. I didn't disagree there was inflation in any of my comments. Further, the article admits at the very end that increasing inflation was ultimately what forced Coke to raise its prices. Doesn't that imply that the lack of high inflation was part of what enabled Coke to maintain low prices initially?


"Measurements of CPI during that time point are of more questionable accuracy"

I am not sure what you mean here - "of more questionable accuracy [than CPI measurements today]", or "of more questionable accuracy [than gold in reflecting the cost of producing a coke]"? If the former, I grant it, but not (automatically) that it's enough to make a difference. The latter seems absurd - as I elaborate on a bit below.

"CPI measures many different types of goods (not all go up together)"

Coke is made out of many different types of goods (in terms of everything it takes to put a bottle on a store shelf), plus labor of people who want to buy many different types of goods. CPI should be expected to track the cost of producing a coke quite a bit better than a single commodity that isn't even involved in the manufacture and which experienced changes in supply that had nothing to do with coke.

"[A] doubling of CPI over that many years is relatively low inflation."

Relatively low, but not absurdly low, and certainly not completely flat; and note (!) that the end points picked here are not representative. 1930 CPI is the start of the depression; inflation in the 1920s was higher than anything we've seen since (says wolfram alpha) and the price of coke did not move.

To the general, implied counterfactual - "would Coke have raised it's prices sooner if there were much higher inflation?" - I think we have to answer "of course", but that doesn't necessarily mean that unusually low inflation was a significant part of it. Earlier periods have experienced less inflation, but coke's price lasted an unusually long time.


How did Coke get away with loading blanks into machines? Doesn't that break some kind of law? Genuinely interested in how they managed to make that fly.


According to the Planet Money podcast, the idea was never implemented.


Longest known stuck price. It used be be standard here to ask for $20 of petrol. That is all fine, but if you forget and do that now that petrol is expensive, you have to refill about a day later. Turns out equating an amount of petrol by a variable that continually changes (ie goes up) isn't such a good idea.




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