Tuesday, January 20, 2015

"Small is beautiful"- For whom, industry or the consumer?

Who does not remember the famous book "Small is beautiful: A collection of Essays As If People Mattered" by the reputed British economist E.F Schumacher. He championed the cause of small, appropriate technologies which are claimed to empower people more compared to the "bigger is better" catch phrase that is prevalent to day. Whether the beverage industry which has more and more youngsters in its vice like grip, churning out billions of bottles of sugar sweetened soda, has taken inspiration from Mr Schumacher or not, the current trend in manufacture of soda is to reduce the size of the soda bottle or can giving an impression that it will help the consumers in taking less and less of these drinks. But how can the industry do this considering that if it really works, its sale will plummet down dramatically? The ground reality shows that the beverage industry is booming after the introduction of small packs contrary to the impression that such down sizing will cut down soda consumption! Here is a take on this contradiction happening in the soda capital of the world viz USA. 

"Soda sales may be in a slump, but one sliver of the soft drink market—the segment that comes in smaller than usual sizes, including those adorably tiny 7.5-ounce cans—is booming.  What's especially curious about the trend is that sales have been taking off even though the smaller packages offer far worse value to consumers. This week, the Associated Press explored this odd scenario, in which consumers are clamoring to buy Coke, Pepsi, and other sodas in unconventionally smaller sized packaging, notably the 7.5-ounce mini can that's generally sold in eight-packs in stores. Previously, the Wall Street Journal reported that sales of smaller Coca-Cola packages—including the mini cans, as well as 8-ounce glass bottles and 1.25-liter plastic bottles—were up 9% through the first 10 months of 2014. During the same time period, sales of regular old 12-ounce cans and 2-liter bottles were as flat as a bottle of week-old Coke. Beyond their nontraditional size, what all of the smaller soda items have in common is that they're "premium-priced packages." Yes, the value proposition in the trendy category is that you not only get less product, but you get to pay more for the privilege. Coca-Cola estimates that consumers typically pay 31¢ for each traditional 12-ounce Coke purchased in a 12- or 24-pack at the supermarket. By contrast, the average price per 7.5-ounce mini can breaks down to 40¢ a pop."

We may recall that when measures were proposed to restrict the sale of jumbo sized soda bottles in New York, industry got the proposal squashed through judicial intervention under the pretext that such policies infringe on the fundamental rights of a citizen in deciding what to buy for himself! Look at the situation now when the very same industry is offering smaller sized versions after its market research provided a clue that people will buy more and more smaller packs compared to larger ones resulting in more frequent consumption! Interestingly consumers have to pay more for smaller sized versions though they may not be realizing it at the time of purchase. This trickery is very common in India where food industry as a whole indulges in this strategy, the intention being to expand the clientele base to include consumers in the lower income bracket who otherwise could not afford high priced larger packs..Consumers seem to be happy while he is being cheated, to hear the industry repeating ad libitum the worn out industry slogan "consumer is the king" where as he really turns out a sucker in the bargain!


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