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PaperclipPerfector  11mo ago (text post)   27236 thread views

Culture War Roundup for the week of December 11, 2023

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It’s actually a commonly discussed topic in the global supermarket and FMCG business because the cost of fresh produce and indeed the majority of even shelf-stable goods is upwards of 50-100% higher in the US than in much of Western Europe. Identical groceries that cost $50 in the UK can cost $100 or more in HCOL regions of the US. Freight costs alone don’t explain it, the most common explanation within the business is indeed that the much larger average square footage of eg. a Kroger in the US vs a Tesco in the UK and associated higher costs are a core part of the reason, plus higher margins across the supply chain.

What’s your explanation for why groceries cost less than 1/2, sometimes 1/3 of what they do in the US in Germany?

This makes no sense at all. There are economies of scale involved, which is why there are supermarkets in the first place. Smaller stores are more expensive, not less.

Looking at the G20, American fruit prices look unremarkable. Vegetables appear higher, but not anything like two or three times the cost, and still lower than the differences in incomes. Meat prices appears somewhat lower.

This is genuinely one of the weirder claims that I've seen recently. Small grocery stores definitely don't tend to be cheaper than large supermarkets. If there is some actual data that I'm missing, I would find it pretty interesting, but I genuinely don't know where the idea that American groceries are super expensive is coming from.

Small grocery stores definitely don't tend to be cheaper than large supermarkets.

The opposite tends to be true, in fact.

It’s a longstanding question. From The Economist (via stackexchange):

A study in 2017 by the un’s Food and Agriculture Organisation found that the cost of eating healthily in America was 65% more than in Britain, and among the highest in the rich world

...

Why are American consumers not getting a better deal? A transatlantic comparison is revealing. Walmart, which accounts for about 26% of the American market, has a gross margin (its profit before fixed costs like rent and labour are taken into account) of about 25%. For Tesco, Britain’s largest chain, which has 27% of its home market, the equivalent figure is 8%. Since the two firms both have low net margins (overall profitability), this suggests that Walmart has higher fixed costs, and has to charge a big mark-up.

This shifts from "cost of produce" to "eating healthily", which are not clearly interchangeable, and the latter is a questionable category altogether. Your previous posts included "much of Western Europe" and specifically called out Germany as a place with half to one third the cost, but the article you just linked shows France on par and Germany/Spain within ~10%. As percentages of income, these are all higher than what Americans are spending. The article also doesn't reference electric use at all.

I think I'm going to settle on the idea that electric use in supermarkets doubles the price of produce being one of those weird things that some Europeans decide to believe about the States for inscrutable reasons.

Rafa’s half-american and atypical in any case. This all started when an american claimed a dozen eggs costs 11 dollars. Europeans are not aware of this, much less speculating on it, so leave us out of it. If I had to throw a guess for the somewhat higher prices, it would be the massive choice americans seem to prefer. Aldi and lidl are famous for cutting costs by having only one or two of each thing, but even regular european supermarkets do not compare to the diversity offered by american supermarkets in peanut butter flavours and the like.

Eggs in particular are kind of weird. Depending on your perspective, they can be either a fancy food (nice eggs benedict at a fancy brunch restaurant) or a cheap food (substituting eggs in place of beef, which has also gone up in price a lot). Then there's like two dozen varities at any supermarket, for cage free, organic, etc, which frankly leave me baffled which one I should choose. There isn't any one "price of eggs."

Indeed. Baumol cost disease seems a rather more likely reason.

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