In ten years, the price of a fried dough stick has quadrupled, and a breakfast has changed from 2 yuan to 11 yuan. But coke, the world drink, has not risen much. Why?

The reason for the price increase is easy to explain, because it is an inflation phenomenon in our life, which is very common and intuitive. In the past ten years, the broad money supply has tripled, the economic scale has increased by 1.8 times, and the money has been issued faster than the economic growth; Secondly, the general income of the people has increased. Whether buying things or selling things, the price increase is a natural choice.

And those things that don't increase prices are relatively complicated, which may bring us more enlightenment.

why coke doesn't increase its price can be explained by menu cost and Cournot equilibrium in economics.

the menu cost is easy to understand, that is, the merchants have to spend money when they raise prices.

Restaurants have to reprint their menus to change their prices. If Coke raises its prices, it has to change its advertisements, adjust its marketing strategy, and try to appease the protesting consumers ... It's better not to raise prices.

and Cournot equilibrium, generally speaking, there are only two sellers in a product market, and there is basically no difference in what they sell, and there is no collusion between the two sellers, but they both know how much the other party will produce and how to price it, so that both parties can determine the optimal output to maximize profits.

under this balance, low prices and meager profits keep most competitors out of the industry, while a few giants rely on scale to survive and get considerable total profits.

Coke can reduce its cost by mass production. For example, the automatic production line of Coca-Cola can fill thousands of bottles of Coca-Cola in one minute. In the corresponding cost structure, the proportion of manpower is very small, and the substantial increase in labor costs in recent years has little impact on it, so the price can be maintained in a relatively stable state.

However, large-scale production and low cost only explain that Coca-Cola really has the ability not to raise prices, but it does not explain its willingness not to raise prices. This involves the market structure of coke.

Coke is a duopoly industry. When there is only Coca-Cola and Pepsi, they are the only two bosses who love each other and kill each other.

in order to maximize their respective interests, they will adjust their output according to each other's output, and the corresponding price is pricing. Because the new brand is small, it is difficult to achieve the same low price, so we can only quit.

low price used to be the advantage of coke, but now, because there are more and more drinks such as milk tea and fruit juice, the price increase of coke will also make consumers reduce their consumption of coke.

as a result, only the original price can be maintained.

Both Coca-Cola and Pepsi are already so large-scale, and the cost can't be lowered any further, which is only a little profit margin. If a competitor wants to enter this industry, he can't do it on such a large scale, and he can't reduce the unit cost to as low as delicious and Pepsi, and it is impossible to make money at all.

Therefore, this industry has very high competition barriers and low profit rate, but two big players can make money by virtue of their scale.

on the other hand, if the price is raised, the profit rate will be improved at first, but new competitors will continue to enter. With the start of the price war, the price of products will be lower and lower, and the profit will be lower and lower.

pricing should be related to both cost and marketing. I don't know much about marketing. Briefly talk about the cost.

the raw material cost of a bottle of beverage is basically in packaging. PET bottles, labels and lids account for a large part of the material cost. These things add up to more value than drinks.

I don't know much about the raw pulp cost of the parent company of Coke. But in recent years, the cost of packaging materials is declining. Take the bottle as an example. On the one hand, the price of raw material PET particles has remained at a low price in recent years. On the other hand, Coke has spared no effort in promoting lightweight bottles. The weight of the familiar paper-thin ice dew bottle is almost half to two thirds of that of other canned water bottles. This alone will save tens of millions of yuan a year for a production line.

The increase in domestic labor costs in recent years has actually affected Coke. However, the increase in production line efficiency almost offset the increase in labor costs. Fifteen years ago, most of Coke's beverage production lines were over 11,111 bottles per hour. But at present, the production line is basically 48,111 bottles/hour, while the latest pure water production line is 81,111 bottles/hour. Now one production line can top three. And because the production line is highly automated, the number of workers required for each production line is also reduced a lot. Therefore, in terms of average labor cost, coke should not increase, but also decrease slightly.

as for equipment, on the one hand, many domestic equipment is mature, replacing some imported equipment. On the other hand, although the price of imported equipment has risen steadily in recent years, it has not increased much. Moreover, due to the strength of the RMB, the cost performance of domestic imported equipment is actually higher than before.

In fact, the profit of Coke in China has declined in recent years. At present, Coca-Cola has its own bottling plant and cooperative OEM in China (such as COFCO Cola, Shanghai Ziquan, etc.). Workers in Coke's own factories are well paid, and equipment maintenance is willing to spend money on imported spare parts, which makes these factories basically unprofitable. However, domestic foundries use a large number of laborers (without social security), use domestic spare parts, and reduce equipment maintenance costs. At present, all the processing plants under Coke are in the process of transfer-to foundries such as COFCO Cola and Swire Cola. Compared with Pepsi-Cola in China, which was all bought by Master Kong a few years ago, Coca-Cola has done a good job.

1. The labor consumed in the production process of Coca-Cola is almost negligible.

Yes, you are not mistaken. After the whole manufacturing process of Coca-Cola is only packaged, it needs manpower as a transportation work. The labor cost in the whole manufacturing process can be directly ignored. It is completely unmanned. How can the labor cost increase?

In fact, due to the improvement of the production line or other reasons, the number of employees in the whole Coke production has been decreasing continuously. Take a factory as an example, it has decreased by at least 51% in the last 11 years.

In addition, the coke production is basically produced by the OEM (in fact, the drinks of different brands we drink may all be produced by one factory), and the wages of these OEM are still very low. Far less than the wage increase in coastal areas

2. Dealers at all levels increase prices layer by layer, which shows that they know nothing about the coke system < P > There are no so-called dealers at all levels in Coke, but they are all big distributors at least at the provincial level, even across provinces, and the following dealers are not within the management scope of Coke at all, but only at a relatively fixed fee.

Specifically, it is monopolized by COFCO and other super central enterprises.

Coke produced by outsourced processing plants is directly transported to storage and transportation points, and there is no possibility of transporting it in the middle, so the cost is too high.

There are several reasons why Coke didn't increase its price.

1. Faced with fierce competition, it is afraid to increase its price. The sales of Coca-Cola in China are basically getting worse every year, so how dare you increase the price?

2. Actually, Coca-Cola has not invested anything in China. In fact, at least 91% of the processing, 111% of the transportation and 111% of the sales are outsourced, and the account period is at least 6 months. Only after the products are sold can the accounts be settled. In fact, Coke provides a brand in China, and the actual investment can be said to be very, very small. Coke can be said to be the largest leather bag company in China manufacturing industry. Without any investment, the natural profit is high

, that is to say, Coke actually only provides one brand, and the funds needed for operation (including manufacturing, transportation and sales) are provided by outsourcing partners.

3. The biggest cost of Coca-Cola is actually transportation. Compared with the manufacturing cost, the transportation cost is really big. However, Coca-Cola mainly relies on railway transportation, benefiting from the stable railway freight rate, so the cost of Coca-Cola has actually been very stable.

Moreover, due to the fact that there are many more branch factories in Coca-Cola than 11 years ago (reducing the transportation distance) and the expansion of expressway (the high-speed transportation cost is much lower than the non-high-speed cost), it can be said that the freight rate of Coca-Cola is very stable. For some provinces, it may still be declining.

4. Because Coke is a strong brand, the entrance fee is zero for Coke, so the maximum cost of sales is actually stable.

So the cost of Coke has been stable, instead of increasing a lot as you think. In fact, for China's manufacturing industry, the artificial increase has been offset by other means, and all the factories that cannot be offset have closed or left.

Not only cola, but also the prices of industrial products in China have been very stable in recent 11 years, and it can even be said that most of them have been reduced.

Don't just talk about labor. In fact, for modern China manufacturing (non-labor-intensive enterprises), most of the labor costs only account for about 11-21% of the total cost.

The key point is that cola has never been upgraded. Before 11 years, there was a can in 2.5 yuan. No, what hasn't changed? Why does he raise the price? Coke can be said to be an investment and a hundred years of income. Moreover, in terms of sales volume, Coca-Cola Pepsi should be the 1-2 largest beverage factory on earth. Cost control and management operation are beyond the reach of us outsiders.

Reply:

1. The innovation or plagiarism of Coke has never stopped, and at least dozens of new varieties are added every year. Milk tea, which has been popular in recent years, was actually produced by OEM n years ago, but I don't know why it didn't reach the China market. I quite like the taste of this milk tea.

Go to the supermarket and have a look. Generally, there are at least 15 kinds of cola products on sale.

It's just that there has never been a fire

2. The management level of Coke is not as high as you think. Personally, I think the management level of Coke, especially in recent years, is also quite poor.

Coke just doesn't make hard money, most of it is outsourced, and it only does some core and negotiation things.

I think the only thing commendable about Coke is the payment system. When the time comes, the money will be paid automatically. This spirit of valuing contracts is a myth to some China companies in my industry.