This may count as an “old man yells at cloud” moment, but before the Flu Manchu lockdowns and the resultant supply chain breakage, HEB’s house brand of Diet Root Beer went for $2.25 a 12-pack. Now, here in early 2025, it’s going for $5.20. I calculate that as a 131% inflation rate over five years, considerably above the official 21.9% phony baloney “let’s lie for Biden” rate. So what gives?
My first thought was “Well, aluminum prices must have gone through the roof again.” Nope.
Aluminum shot way up in 2022, and then came right back down, and has been essentially flat for two years.
As one of the biggest costs in soft drinks 12-packs, you’d think prices might be stable for that, but no. The prices for name brand soft drinks have gone up as well.
Even if we can all agree that the real inflation rate is much higher than admitted, why are soft drinks up so much more than even the unofficial rate?
If you have any idea, please feel free to share in the comments below.
When Spanish speaking gatecrashers showed up in Texas they were immediately awarded SNAP cards but didn’t have the requisite ID to purchase alcohol. The root beer was purchased as a “Cerveza” substitute.
This unanticipated demand drove prices higher.
Admittedly, this is as unlikely an explanation as anyone else can offer…
Nowadays the name brand sodas are marketed with a high individual price (~$10 / 12 pack), but with weekly offers such as buy 2, get 2 free. So they are pushing quantity and the effective price is about $5 per 12 pack for those who would drink that much.
As for the store brands, I think they’re just rising because people will pay that much when they only want one 12 pack at a time.
I believe it is mis-managed production. For example, I live in Iowa and getting the small 12-oz bottles is nearly impossible. I extrapolate that the soda sellers are using more aluminum than plastic. Or possibly their distribution is still screwed up from Covid. Or Walmart is simply cutting back on choice because it costs them money.
Because they can! Inflation is the excuse
Because many many retailers and suppliers in the chain have taken advantage of the situation and simply raised prices. If the market can sustain it without them losing business, BAM, they made a great decision. If the price is too high, sales will suffer and price will come down. It pure old supply and demand and some companies are pushing the limits. $6 for a bag of chips?!! Crazy
Raw materials costs are twice as significant as packaging costs in CSD production. Carbon dioxide is the single greatest cost in CSD production. American carbon dioxide prices are up well over 50% since 2020, as tracked by the BLS’s “Producer Price Index by Commodity: Chemicals and Allied Products: Carbon Dioxide”.
The U.S. price for bulk carbon dioxide gas was about the same as the global market price in 2020. Today, the U.S. price for bulk carbon dioxide gas is more than double the world price due to:
1) cartelization in the American industrial gas industry,
2) massive increases in urea fertilizer production consumption,
3) tremendous consumption by petroleum EOR, and
4) massive sales of American LNG to foreign customers.
LNG prices have relaxed since 2022, but there is a huge shortfall in carbon dioxide production capacity due to cartelization. Linde, Air Liquide, and Air Products control over 70% of the American market. They set the prices.
Also, the price of carbon dioxide gas rocketed up 30% in the 30 day February – March 2022 period. Care to guess why?
My brother, an HEB store manager for many years also stated 10x25mm’s observation, and adds the other product ingredients, fuel and labor costs are a lot higher as well.
Information that doesn’t answer the question, but may raise some:
A 390ml bottle of Coke is 12,000 VND at the Kwikimart in Saigon. That’s under fifty cents, and it seems to be on a buy two get three sale every three months. I think cans are comparable, but on a different discount rotation – ie month one no deal, month two bottles, month three cans.
I’m guessing that root beer is an expensive luxury import at the specialty store.
BMI/FYI, a Big Mac costs 79 kiloDong, a little over three bucks.
The likely factor is transportation costs. The soda itself is the smallest part of the cost. Soda is cheap, mostly water with additives. Water is heavy and bulky. Packaging costs more then the product inside. Transport with labor and fuel coats the most.
If you drink fizzy stuff on the regular, SodaStream is your friend. Here’s a breakdown of the costs, although I haven’t verified it personally:
https://www.thepennyhoarder.com/save-money/is-sodastream-cost-effective/
Also, by buying a SodaStream you will be supporting the dreaded Zionist entity, so Greta Thunberg will hate you, which is a plus. And by not wasting precious resources on packaging, you will be saving Gaia, which will make Greta love you. The resulting cognitive dissonance may cause her head to explode, so wins all around.
I hear/read things like this and my decision to dive through the local (residential college) dumpsters is validated once again. Students are incredibly wasteful creatures, and at the end of the semester I harvest all kind of shelf-stable, air-tight-sealed, and/or frozen solid foodstuffs (not to mention all the non-food consumables they toss: soap, shampoo, toilet paper, school supplies, clothes, cast-iron skillets, etc).
All costs are downstream from the cost of energy. The Biden Administration has been using every tool in their bag–and they have a lot of them–to increase the costs of electricity, gasoline, and diesel fuel.
Malthus’ comment is close to my theory, but I can add this: Soda is (a) Non-perishable, (b) portable, (c) divisible into small units, and (d) standardized and fungible. When I put my Ludwig von Mises glasses on, I see a commodity money. Indeed, soda has a long history of being circulated as informal money, where low-income recipients of government aid convert their restricted assistance into cash on the secondary markets.
Why the recent bubble? Probably more demand as the accumulated ranks of Biden-era immigrants try to move to a more cash-like position in the face of uncertainty.
It is a mistake to impute the price of consumer goods to the sum total of production costs. Whatever value this process has, it is not economic activity (catalactics); it is economic HISTORY.
Soda pop is politically designated as being “junk food”. The new MAHA czar is going to come down hard on this food category. Taking corn syrup out of soda pop and replacing it with sugar will add significantly to the Cost of Goods Sold.
Ostensibly, what we are witnessing here is an attempt by entrepreneurs to anticipate these higher costs. Entrepreneurs are not reacting to economic history; they are calculating REPLACEMENT costs. If it will cost more to buy ingredients in the future, a pool of funds must be formed now so as to absorb the anticipated higher cost.
This will all work out okay. Feel free to speculate as to the “why” but remember this one thing: Entrepreneurial speculation is superior to metaphysical speculation in its organizational effects!
But if you do insist on subjecting the price of root beer to metaphysical speculation, try to avoid the logical fallacies displayed here, e.g., Appeal to Authority, & etc.
Addendum: cost push inflation was debunked during the Carter administration and the “market failure” argument is Marxist obfuscation. Get an economic education if you find yourself promoting this nonsense.
“Malthus’ comment is close to my theory,..”
No-o-o-! It was meant in jest as a conversation starter.
For a catalactic-based economic analysis, see the 12:04 post.
Well, at least you can get it. During Covid, it was impossible to get canned lemonade. Then it finally came back (higher priced of course), and now it’s gone again. You can get a six-pack of 16 oz lemonade (at twice what it cost before Covid).
[…] Why Is Diet Root Beer Up 131% Even Though Aluminum Is Down? “This may count as an ‘old man yells at cloud’ moment, but before the Flu Manchu […]
Short Answer: Because they can (pun intended).
Long Answer: The name brand sodas are up significantly post covid. I used to be able to regularly find 2-liter bottles of the name brand sodas on sale every month or so for roughly $1 per bottle if you bought 10 or more. I would stock up at that price. Now it rarely goes on sale, and when it does the ‘discounted’ price is roughly $3.00.
I am simply not paying 3x what I was paying 4 years ago. So I switched to generic equivalents from Kroger. Pre-covid, the Kroger generics were regularly on sale for ~$.75 per 2-liter in quantity. Now it is is regularly on-sale for $1.25 to $1.50 per 2-liter.
Following classic economics, when the costs of a good went up, I found a substitute. As did others. The increased demand for the substitute eventually drove up the cost of the substitute as well.
I have noticed the same for meat prices. When beef went through the roof, I first switched to chicken. Then chicken went up, so I switched to pork. Now pork is going up…
Mr. Fricklesnits got it right
George B offers this valuable insight: “ Soft drinks also function as currency, pushing their price up. People with an EBT card for food can convert that government benefit into cash by buying soft drinks that can be stored without refrigeration and resold to get cash. This is an obvious area for DOGE reforms.”
H/T Instapundit
So my earlier observation about SNAP cards is not completely at odds with the situation on the ground.
The huge increase is due to massive energy cost increases are from Biden’s ….er Obama, deliberately impoverishing the American consumer to further the Marxist – Leninist agenda. These include the the added energy costs of manufacturing and transporting each of the raw materials, and the transportion costs of delivering the finished product to the stores.