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Friday, May 31, 2019

Why Is Soda More Expensive Than Beer


Took a walk down to one of our local stores in Lima, Ohio and came to realize that my two cans of soda cost more than my one can of beer. Although beer and soda are both carbonated, the process for brewing beer is nothing like making soda.

Before we get into all of that, my thing is! Soda is mostly used by young adults and beer by grown adults. So why charge them more? On top of that, lets not get into the Government taking away candy with food stamps.

The law around selling alcoholic beverages plays an important role as well. Especially as production levels scale to massive quantities, the differences in prices become, in absolute terms, significantly smaller.

Soda is made by purifying water, pumping sugar and flavor into it, and then putting the solution through a carbonator which increases the carbon dioxide pressure of the water, putting bubbles in it. Besides ingredients, factory time is what drives the price of most products up.

Beer is made through brewing with fermentation. This starts with a brewer taking barley and extracting sugars from it by boiling. This initial process might be more time consuming and more energy-intense than the whole soda process.

The beer is then carefully bottled without adding air or contamination. It still must complete the fermentation process in the sealed bottle over some time. This is called bottle conditioning.

So in other words, beer takes longer and soda is more machine work, why is soda more expensive? Or am I just shopping at the wrong stores? Leave your comments I would like to know your thoughts on this topic.

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4 comments:

Anonymous said...

Hey dude i'm wondering the same thing! I'm trying to leave my alcoholism behind and I cringe everytime I head to the store to get a carbonated sugar drink and it's a 1.35$ more than a tallboy. Such bs

Anonymous said...

Why because inflation has gone out of control. Sure egg prices are down but everything else is sky high and getting higher with no end in site. Welcome to Capitalism. Where prices and rent keep going up and up and up. There is no stopping it.

Anonymous said...

Point 5, basically because they can.

Subsidies and Pricing: You're absolutely correct that the high-fructose corn syrup used in sodas like Coca-Cola is heavily subsidized in the U.S., making it cheaper as an ingredient. However, the presence of a subsidy doesn't necessarily mean lower prices for consumers. The goal of a subsidy is often to support the production of a certain good rather than to reduce its price. Companies may choose to use the cost savings from subsidies to improve their profit margins rather than pass the savings onto consumers.

Pricing Power: Coca-Cola, due to its global brand recognition and high market share, has substantial pricing power. This means that they can set higher prices, and consumers are still willing to pay for their products due to factors like brand loyalty, taste preference, etc. This kind of pricing power often allows companies to price their products well above their cost of production.

Cost Structures Beyond Raw Materials: While raw materials make up a significant part of the cost of goods sold (COGS), they aren't the whole picture. Other costs factor into the final price of a product. For Coca-Cola, these costs can include bottling and packaging, marketing, distribution, and R&D, among others.

Volume and Margins: The high volume of Coca-Cola products sold does allow for economies of scale, reducing the cost of production per unit. However, high volume doesn't always equate to lower consumer prices. It could be that Coca-Cola uses their high volume to increase their profit margins, rather than lowering the price for consumers.

Profit Maximization: Ultimately, businesses aim to maximize profits. This often means selling their goods at the highest price the market will bear. For Coca-Cola, the market might be willing to bear a higher price than it is for craft beer, despite the lower costs of production.

Pricing strategies can be complex and are often based on more than just the cost of production. They take into consideration market forces, competitive landscape, brand strength, and consumer preferences, among other factors.

Anonymous said...

Have you notice that beer prices have not went up at all since before Covid-19 began? In my opinion the only reason soft drinks are so high is corporate greed. Using such reasons as supply chain issues and aluminum costs are laughable when the beer industry uses these too.

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