Why Coke Cost A Nickel For 70 Years

November 18, 2012 in Daily Bulletin, Signature

David Kestenbaum wrote a fascinating piece titled “Why Coke Cost A Nickel For 70 Years”. He notes that between 1890 and 1960 – a period of time that covered a Depression and two world wars – the price of coke remained unchanged at five cents. The reason or this is:

  • The President of Coca-Cola thought that bottled Coke wouldn’t sell well. So when a couple of entrepreneurs asked to sell bottled Coke on his behalf, he agreed to sell them the syrup for a fixed price, thinking that their enterprise would fail.
  • However bottled Coke was extremely successful, and the makers of it had an agreement to buy the ingredients for Coke for a fixed price indefinitely.
  • Coke itself couldn’t determine what price the bottles sold for. But if the price were to increase they wouldn’t see any increase in profits – all the proceeds would go to the Coke bottlers.
  • To fight this eventuality, Coke went on a marketing blitz which made it clear that Coke was to be sold for five cents – and no more. This made it impossible for the Coke bottlers to sell the drink for more than five cents.
  • Coke was also being sold in vending machines which could either accept five cent coins or ten cent ones. Five cents was too low, but doubling it to ten would be too much. Instead Coke worked with the government to (unsuccessfully) produce a 7.5 cent coin.
  • Eventually inflation made five cent Coke impossible, and the deal with the bottlers was renegotiated.

Read more about this fascinating quirk of history by clicking here.

Source: NPR