Planet Money Why the price of Coke didn't change for 70 years (classic)
28 snips
Oct 11, 2023 For 70 years, a bottle of Coca-Cola stayed at just five cents, a remarkable price stability in a world of inflation. The podcast explores how this anomaly challenges traditional economic views and the strategic decisions made by Asa Candler. Discover the fascinating story behind vending machines designed for nickels and the company's quest for a new coin. With insights into 'sticky prices,' learn how Coca-Cola's stable pricing influenced consumer behavior and solidified its place in the market.
AI Snips
Chapters
Transcript
Episode notes
The Nickel Coke Mystery
- Economist Daniel Levy questioned the unchanging price of Coke after a visit to the World of Coca-Cola museum.
- This led him to investigate the reasons behind this anomaly.
The Perpetual Contract
- In 1899, two lawyers proposed bottling Coke, which then-president Asa Candler saw as a foolish idea.
- He signed a perpetual fixed-price contract for syrup, inadvertently impacting Coke's pricing for decades.
Advertising as Price Control
- Coke's fixed syrup price meant increased retail prices benefited bottlers, not Coke.
- Coke strategically used advertising featuring the nickel price to control pricing and maintain sales volume.