Wednesday, February 15, 2023

Something to Know - 15 February

Today gives us a glance into the world of competition or lack thereof into stuff we buy.   If you cannot collude your competition to fix prices in the marketplace, you can also eliminate the competition to the point that your product or industry is dominated by 70 to 80 percent  of what you are selling.  Of course, in the spirit of competitive marketing, you can offer a great product at the same price or lower than your competitors.   But NO.  Greed and operating in the underbelly of capitalism, you can thrive by buying up the competition.   Airlines try to do it, pharmaceuticals do it, grocery stores are always doing it, and just about anything you can think of enters the world of unfair marking tactics.   Here is an example of what the Beer guys do:

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Office Hours: Fake brand competition, monopoly power, and inflation

Why do the media and lawmakers blame wages instead of monopoly power?

FEB 15

If you watched the Super Bowl last Sunday, you might have seen an ad where spokesmen for Coors and Miller Lite got into a physical fight over which beer the ad was for — only to have it revealed at the end that it was an ad for Blue Moon.

Of course, it was really an ad for all three beers, which are owned by just one big corporation, Molson Coors. In fact, Molson Coors owns over 100 beer brands.

Yesterday, the Bureau of Labor Statistics reported that inflation slowed a tad in January. But the costs of certain items continue to rise faster than inflation — alcoholic beverages, for example. Does this have anything to do with the power of Molson Coors and a handful of other beer giants to raise prices?

Meat, poultry, fish, and egg prices also rose faster than inflation last month. These are further illustrations of fake brand competition. In reality, just four giant corporations now control 85 percent of beef packing, 66 percent of pork, and 54 percent of poultry.

Such consolidation gives a handful of giant corporations the power to raise prices.

From soda to soap, behemoths like PepsiCo and Unilever dominate store shelves with multiple brands, creating the impression of competition. But the brands disguise market power that enables these giant corporations to raise their prices and increase their profits.

PepsiCo (owner of Pepsi, Lay's, Quaker, Gatorade, Tropicana, 7UP, Doritos, Cheetos, Ruffles, Pizza Hut, Taco Bell, and more than 20 other brands) raised prices 16 percent in the fourth quarter from a year earlier.

Unilever (owner of Dove, Hellmann's, Knorr, Lifebuoy, Lux, Sunsilk, Vaseline, Ben & Jerry's, and more than 300 other brands), raised prices more than 13 percent.

Profits at both companies beat Wall Street's expectations.

So today's Office Hours question: If monopoly power is a major factor behind inflation, why do the media and elected lawmakers continue to blame inflation on wages — which haven't been increasing nearly as fast as the prices of the products and services of big corporations?

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Q. What's the difference between a Hippo and a Zippo?

A. A Hippo is really heavy, and a Zippo is a little lighter.

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