The value of brand is rising which increases the prices paid by consumers for commodities. This makes people buy less of the underlying commodity and more of th

The value of brand is rising which increases the prices paid by consumers for commodities. This makes people buy less of the underlying commodity and more of the overarching brand. Think about coffee. It’s a commodity. But more people are spending $4-5 on a single cup instead of $4-$5 on a pound of grounds. Spending power does not match price change. A good historical case study is Standard Oil. In an effort to stabilize prices and reduce peaks, Standard oil established last mile delivery for refined oil. People bought Standard Oil at the grocery store. Standard didn’t start buying oil wells until 20 years into the company after they had pressured prices down to the bottom.