4 ms·

There are massive economies of scale in ingredient sourcing, supply chain management, production, marketing, advertising and product placement with very high mi

There are massive economies of scale in ingredient sourcing, supply chain management, production, marketing, advertising and product placement with very high minimum efficient scales for global consumer goods products. It is inevitable that the global consumer goods industry consolidates into a handful of large groups as has happened, and the outcome is lower prices to consumers.

JumpCrisscross 9y ago
> It is inevitable that the global consumer goods industry consolidates CPG companies are distribution and marketing powerhouses. They rose with supermarkets and mass media. The rise of voice-based ordering, as well as shops like Amazon, fundamentally threatens their business model.
- ucaetano 9y ago
  Indeed, the same factors that led to their success (global supply chains, standard ingredients and manufacturing processes) eventually could make the irrelevant, as the brands become irrelevant.
rndmize 9y ago
> ...and the outcome is lower prices to consumers. Not totally sold on that part.
- ucaetano 9y ago
  Oh, it does, by lowering the production cost of the products, which allows competition to drive prices lower. Unless, of course, the market turns into a monopoly. But even in oligopoly markets (such as the cola/soda) there is still plenty of choice, especially around lower cost products and with the rise of white-label/home-brand products.
- hueving 9y ago
  If the prices were higher, it would be trivial for local businesses to displace them in stores.
  - s73v3r_ 9y ago
    Not really, given that there can be high barriers to entry in getting on store shelves in the first place.
    - hueving 9y ago
      Not really, I've seen many grocery stores have sections dedicated specifically to local stuff because of the whole 'local' movement.
  - ElmntOfSurprise 9y ago
    Just the threat that a big company has the capacity to lower prices drastically can keep small companies from entering a market.
    - ucaetano 9y ago
      In some cases, yes, but take a look at your local supermarket and see how many new brands not owned by the large ones popped up in the past few years. You can also look at how much the large ones are buying local new brands (such as Blue Bottle). Tastes change, and small local companies are a great way for the big ones to figure out which new products work.

JumpCrisscross 9y ago

> It is inevitable that the global consumer goods industry consolidates CPG companies are distribution and marketing powerhouses. They rose with supermarkets and mass media. The rise of voice-based ordering, as well as shops like Amazon, fundamentally threatens their business model.

ucaetano 9y ago
Indeed, the same factors that led to their success (global supply chains, standard ingredients and manufacturing processes) eventually could make the irrelevant, as the brands become irrelevant.

rndmize 9y ago

> ...and the outcome is lower prices to consumers. Not totally sold on that part.

ucaetano 9y ago
Oh, it does, by lowering the production cost of the products, which allows competition to drive prices lower. Unless, of course, the market turns into a monopoly. But even in oligopoly markets (such as the cola/soda) there is still plenty of choice, especially around lower cost products and with the rise of white-label/home-brand products.
hueving 9y ago
If the prices were higher, it would be trivial for local businesses to displace them in stores.
- s73v3r_ 9y ago
  Not really, given that there can be high barriers to entry in getting on store shelves in the first place.
  - hueving 9y ago
    Not really, I've seen many grocery stores have sections dedicated specifically to local stuff because of the whole 'local' movement.
- ElmntOfSurprise 9y ago
  Just the threat that a big company has the capacity to lower prices drastically can keep small companies from entering a market.
  - ucaetano 9y ago
    In some cases, yes, but take a look at your local supermarket and see how many new brands not owned by the large ones popped up in the past few years. You can also look at how much the large ones are buying local new brands (such as Blue Bottle). Tastes change, and small local companies are a great way for the big ones to figure out which new products work.