4 ms·

Over the last few months I've been noticing a lot of adverts for Heinz products on the radio. They go like this: "When I was younger dad would take us out for

Over the last few months I've been noticing a lot of adverts for Heinz products on the radio. They go like this: "When I was younger dad would take us out for fish and chips. We'd walk along the canal and feed the ducks, even in the rain. Then I'd unwrap the bag, with the steam rising, and squirt on a dollop of ketchup. And, like always, it has to be Heinz." I'm always amazed at the ability of brands to sell £0.20 products for £2.00, and the supermarkets who then sell £0.16 products for £1.00 and claim it's value. I worked for Lucozade (UK Gatorade) for a while. Our total cost, delivered to retailer, of a bottle was 12p. We sold it to them for min 50p and they sold it for at least £1. Ultimately this is a bet on the longevity of consumer brands, which I think is probably a wise one.

erock 14y ago
living in the town where Heinz was founded (Pittsburgh, PA) brand loyalty can get a little over the top, we look down on anyplace that doesn't have Heinz ketchup, and years ago when I live in the bay area, I chastised a restaurant because i knew (I just knew!) they watered down the ketchup. Come on, I'm from Pittsburgh, I know my Heinz
- AlexMuir 14y ago
  I suppose one interesting thing about brands (or perhaps just Heinz) is that we assume they're local. I would have said Heinz was a British company, no question. Likewise with Kelloggs.
  - DanBC 14y ago
    Which has interesting results when the parent company changes a name from Marathon to Snickers. (I agree about the Britishness of Heinz and Kelloggs. It's only in the past ten years that I realised they weren't.)
  - erock 14y ago
    well, we can't get spotted dick here (really we can if you look hard enough(also, i only take pictures of the can to send to friends)), but heinz was founded in Pittsburgh. https://en.wikipedia.org/wiki/H._J._Heinz_Company https://en.wikipedia.org/wiki/H._J._Heinz_Company
  - ahi 14y ago
    Kelloggs' biggest factory is in the UK, but it has something of a strange American history: https://en.wikipedia.org/wiki/Kelloggs#History https://en.wikipedia.org/wiki/Kelloggs#History
    - erock 14y ago
      for more in depth history, check out this book https://en.wikipedia.org/wiki/The_Road_to_Wellville https://en.wikipedia.org/wiki/The_Road_to_Wellville
      - Graham24 14y ago
        and the quality film.
  - parenthesis 14y ago
    As an aside, I grew up very close to a Scottish castle owned by a member of the Heinz family. http://en.wikipedia.org/wiki/Hawthornden_Castle http://en.wikipedia.org/wiki/Hawthornden_Castle
  - robotmay 14y ago
    We do eat something like 95% of all baked beans they produce, however.
- ErikAugust 14y ago
  I have found the same thing about Kraft in Philly.
  - adestefan 14y ago
    Try to take away Tastykake from Philly.
meaty 14y ago
Spot on. Those figures make me shiver. Branding is just not worth it on food when you know about the details. Small rant: I stopped buying brands years ago, avoid supermarkets like the plague and don't buy ready meals. Instead I purchase from wholesalers in bulk and grow a few expensive things (chillis, peppers, tomatoes, herbs etc). Granted I have to buy beans in 2kg tins and pasta by the 5kg bag from the wholesaler but my food bill for 2 adults and 3 children is around £200/month and we eat proper freshly cooked meals every day.
- huherto 14y ago
  Well, you have an economy of scale. 5 people. For me, I think it is cheaper just to buy at the super market and buy ready meals.
  - alanctgardner2 14y ago
    As a bonus, you get lots of tasty horse!
    - Graham24 14y ago
      just say neigh.
    - huherto 14y ago
      :) I don't mind eating horse as long as it has a good taste. Having grown in a place with very good beef, I am very picky for beef. When I buy a steak I prefer to pay a little more. It is not that expensive considering I am only one person.
      - meaty 14y ago
        Horse is great meat - you can't get it intentionally here in the UK any more, well I can't find it. My grandmother used to get it in her war rations. Last time I was in Calais, we found a place that did horse and chips :) +1 for steak. I quite happily used to blow £15 on a good steak.
  - 14y ago
nirvana 14y ago
You're looking at the cost of production, and then the price and assuming that all of the space between the two is profit, and seem to be implying that somehow it is a ripoff. What you're not considering is the value to the customer. The incremental cost of a copy of Microsoft Office (with electronic delivery they cut out virtually all of their manufacturing cost) is close to zero. Probably 12p as well. Yet Microsoft sells that Office Suite for $99 or much much more. If the value of one copy of that office suite to a company is $10,000 in improved efficiency (eg: salaries saved by not having to pay overtime or hire as many people-- remember when spreadsheets were physical sheets of paper and companies had staffs of dozens of women whose sole job was to type up correspondence on typewriters?) then they are "profiting" even more than Microsoft is because the spread is wider. Further, manufacturing costs are only one part of the costs of a product. Yes there's marketing, and advertising which you may hate, but there's also the offices that house the workers that run the company, the royalties paid to people who generate formulations, the taxes paid to the government, the manifold fees, costs, and expenses involved in running a business. All of these raise the actual "cost" from above the 12p manufacturing (and delivery costs I assume you included.) For me, the value of buying a brand that has reliable quality control is often pretty high. If a high quality bottle of ketchup elevates the satisfaction of an inexpensive meal (say fish & chips) to the point where it is on par with a much more expensive meal, like those workers using office, I may be getting more "profit" out of the transaction than the company. This is how I use ketchup. It means I eat out less, and spend less on food and have a higher quality of life.
- AlexMuir 14y ago
  Ketchup is a physical product with raw material costs which requires physical storage and delivery, and must be distributed through intermediaries. It also has a shelf life, and ingredients that fluctuate in price seasonally. Your comparison is about as sensical as me complaining I can't type an essay using 100 bottles of ketchup. However, my points are that a) we routinely pay 10x the 'value' of food products, and b) supermarkets piggy back off our conditioning by brands to offer us 'value' products which still cost 8x what they are worth without any of the advertising/marketing overhead. The parallel would be if Macbook Airs were being made and delivered to Apple stores for $100, or cars were delivered to dealers at a cost of $2,000 and then sold to you for $20,000.
objclxt 14y ago
> I worked for Lucozade (UK Gatorade) for a while. Our total cost, delivered to retailer, of a bottle was 12p. We sold it to them for min 50p and they sold it for at least £1. FMCG goods have typically awful margins on them for retailers. A 50p markup sounds good, but consider that out of that 50p the retailer has to cover transportation costs, salaries, cost of display, cost of retail space, etc. Supermarkets are not exactly raking in profit. And it's not such a rosy picture for the brand manufacturers either. The 20p raw cost of supplying the bottle of Lucozade doesn't include advertising expenses, which for branded products tend to be substantial (after all, that's how they become brands in the first place). Lucozade's parent company, GSK, makes a lot of money, but nearly all of that money comes from bio-tech and pharma. They don't make nearly as much money from Lucozade, and there was actually a story a week ago that they're trying to offload the brand[1]. [1]:http://www.thisismoney.co.uk/money/markets/article-2274545/GlaxoSmithKline-looks-selling-drinks-brands-Lucozade-Ribena.html http://www.thisismoney.co.uk/money/markets/article-2274545/G...
specialist 14y ago
I, for one, get what you mean by "value". Pedantics are not making a distinction between price and value. To illustrate: how many eggs would you barter for a bottle of ketchup? Barter, as in there is no price signal.
olalonde 14y ago
> "When I was younger dad would take us out for fish and chips. We'd walk along the canal and feed the ducks, even in the rain. Then I'd unwrap the bag, with the steam rising, and squirt on a dollop of ketchup. And, like always, it has to be Heinz." Reminds me a great scene from Mad Men http://www.youtube.com/watch?v=suRDUFpsHus http://www.youtube.com/watch?v=suRDUFpsHus

erock 14y ago

living in the town where Heinz was founded (Pittsburgh, PA) brand loyalty can get a little over the top, we look down on anyplace that doesn't have Heinz ketchup, and years ago when I live in the bay area, I chastised a restaurant because i knew (I just knew!) they watered down the ketchup. Come on, I'm from Pittsburgh, I know my Heinz

AlexMuir 14y ago
I suppose one interesting thing about brands (or perhaps just Heinz) is that we assume they're local. I would have said Heinz was a British company, no question. Likewise with Kelloggs.
- DanBC 14y ago
  Which has interesting results when the parent company changes a name from Marathon to Snickers. (I agree about the Britishness of Heinz and Kelloggs. It's only in the past ten years that I realised they weren't.)
- erock 14y ago
  well, we can't get spotted dick here (really we can if you look hard enough(also, i only take pictures of the can to send to friends)), but heinz was founded in Pittsburgh. https://en.wikipedia.org/wiki/H._J._Heinz_Company https://en.wikipedia.org/wiki/H._J._Heinz_Company
- ahi 14y ago
  Kelloggs' biggest factory is in the UK, but it has something of a strange American history: https://en.wikipedia.org/wiki/Kelloggs#History https://en.wikipedia.org/wiki/Kelloggs#History
  - erock 14y ago
    for more in depth history, check out this book https://en.wikipedia.org/wiki/The_Road_to_Wellville https://en.wikipedia.org/wiki/The_Road_to_Wellville
    - Graham24 14y ago
      and the quality film.
- parenthesis 14y ago
  As an aside, I grew up very close to a Scottish castle owned by a member of the Heinz family. http://en.wikipedia.org/wiki/Hawthornden_Castle http://en.wikipedia.org/wiki/Hawthornden_Castle
- robotmay 14y ago
  We do eat something like 95% of all baked beans they produce, however.
ErikAugust 14y ago
I have found the same thing about Kraft in Philly.
- adestefan 14y ago
  Try to take away Tastykake from Philly.

meaty 14y ago

Spot on. Those figures make me shiver. Branding is just not worth it on food when you know about the details. Small rant: I stopped buying brands years ago, avoid supermarkets like the plague and don't buy ready meals. Instead I purchase from wholesalers in bulk and grow a few expensive things (chillis, peppers, tomatoes, herbs etc). Granted I have to buy beans in 2kg tins and pasta by the 5kg bag from the wholesaler but my food bill for 2 adults and 3 children is around £200/month and we eat proper freshly cooked meals every day.

huherto 14y ago
Well, you have an economy of scale. 5 people. For me, I think it is cheaper just to buy at the super market and buy ready meals.
- alanctgardner2 14y ago
  As a bonus, you get lots of tasty horse!
  - Graham24 14y ago
    just say neigh.
  - huherto 14y ago
    :) I don't mind eating horse as long as it has a good taste. Having grown in a place with very good beef, I am very picky for beef. When I buy a steak I prefer to pay a little more. It is not that expensive considering I am only one person.
    - meaty 14y ago
      Horse is great meat - you can't get it intentionally here in the UK any more, well I can't find it. My grandmother used to get it in her war rations. Last time I was in Calais, we found a place that did horse and chips :) +1 for steak. I quite happily used to blow £15 on a good steak.
- 14y ago

nirvana 14y ago

You're looking at the cost of production, and then the price and assuming that all of the space between the two is profit, and seem to be implying that somehow it is a ripoff. What you're not considering is the value to the customer. The incremental cost of a copy of Microsoft Office (with electronic delivery they cut out virtually all of their manufacturing cost) is close to zero. Probably 12p as well. Yet Microsoft sells that Office Suite for $99 or much much more. If the value of one copy of that office suite to a company is $10,000 in improved efficiency (eg: salaries saved by not having to pay overtime or hire as many people-- remember when spreadsheets were physical sheets of paper and companies had staffs of dozens of women whose sole job was to type up correspondence on typewriters?) then they are "profiting" even more than Microsoft is because the spread is wider. Further, manufacturing costs are only one part of the costs of a product. Yes there's marketing, and advertising which you may hate, but there's also the offices that house the workers that run the company, the royalties paid to people who generate formulations, the taxes paid to the government, the manifold fees, costs, and expenses involved in running a business. All of these raise the actual "cost" from above the 12p manufacturing (and delivery costs I assume you included.) For me, the value of buying a brand that has reliable quality control is often pretty high. If a high quality bottle of ketchup elevates the satisfaction of an inexpensive meal (say fish & chips) to the point where it is on par with a much more expensive meal, like those workers using office, I may be getting more "profit" out of the transaction than the company. This is how I use ketchup. It means I eat out less, and spend less on food and have a higher quality of life.

AlexMuir 14y ago
Ketchup is a physical product with raw material costs which requires physical storage and delivery, and must be distributed through intermediaries. It also has a shelf life, and ingredients that fluctuate in price seasonally. Your comparison is about as sensical as me complaining I can't type an essay using 100 bottles of ketchup. However, my points are that a) we routinely pay 10x the 'value' of food products, and b) supermarkets piggy back off our conditioning by brands to offer us 'value' products which still cost 8x what they are worth without any of the advertising/marketing overhead. The parallel would be if Macbook Airs were being made and delivered to Apple stores for $100, or cars were delivered to dealers at a cost of $2,000 and then sold to you for $20,000.

objclxt 14y ago

> I worked for Lucozade (UK Gatorade) for a while. Our total cost, delivered to retailer, of a bottle was 12p. We sold it to them for min 50p and they sold it for at least £1. FMCG goods have typically awful margins on them for retailers. A 50p markup sounds good, but consider that out of that 50p the retailer has to cover transportation costs, salaries, cost of display, cost of retail space, etc. Supermarkets are not exactly raking in profit. And it's not such a rosy picture for the brand manufacturers either. The 20p raw cost of supplying the bottle of Lucozade doesn't include advertising expenses, which for branded products tend to be substantial (after all, that's how they become brands in the first place). Lucozade's parent company, GSK, makes a lot of money, but nearly all of that money comes from bio-tech and pharma. They don't make nearly as much money from Lucozade, and there was actually a story a week ago that they're trying to offload the brand[1]. [1]:http://www.thisismoney.co.uk/money/markets/article-2274545/GlaxoSmithKline-looks-selling-drinks-brands-Lucozade-Ribena.html http://www.thisismoney.co.uk/money/markets/article-2274545/G...

specialist 14y ago

I, for one, get what you mean by "value". Pedantics are not making a distinction between price and value. To illustrate: how many eggs would you barter for a bottle of ketchup? Barter, as in there is no price signal.

olalonde 14y ago

> "When I was younger dad would take us out for fish and chips. We'd walk along the canal and feed the ducks, even in the rain. Then I'd unwrap the bag, with the steam rising, and squirt on a dollop of ketchup. And, like always, it has to be Heinz." Reminds me a great scene from Mad Men http://www.youtube.com/watch?v=suRDUFpsHus http://www.youtube.com/watch?v=suRDUFpsHus