Hacker News Reader

Comment by JohnJamesRambo | Hacker News Reader

I’m constantly amazed at how cheap milk is in the grocery store. A gallon of Great Value 1% milk is $2.77 now. That seems low for what you are getting (a gallon of protein rich fluid milked from a cow and transported to you). How much profit could be left? I’ve heard that grocery stores sell milk for less than they buy it for just to get you into the store, because they know you will buy other things. I haven’t checked the truthfulness of that statement though.

http://www.fmpc.uconn.edu/research/milk/conference/Criner.pd...

A link about the margins implies that may be technically untrue but I don’t know enough about the grocery business to say.

View on HN

The Federal government operates a comprehensive system to manage milk prices to consumers and also to subsidize marginal dairy producers. It's also illegal to sell raw milk and other similar products in most states. The milk producers are often not making money from the sale of milk. When milk prices drop below certain levels, the federal government steps in to subsidize dairy farmers. This creates perverse incentives for the dairy farmers to produce more even when the market is signalling that more dairy farms should close and consolidate.

The entire system is currently pretty strange. Even family farms wind up feeding into corporate wholesale conglomerates. So the "small farms" that are non economic wind up supplying the corporations who pasteurize, package, process, and market the milk for retail both as milk and as other finished products. The corporations that can bear the regulatory and other costs wind up profiting from the farmers who are indentured to the government. They may not be literally indentured but it's a good metaphor for the relationship. They get bottom price milk from subsidized producers while keeping the retail profits.

Grocery stores have tons and tons of loss leaders. Anything perishable unless it is premium priced is probably going to lose money. Dealing with low priced perishable, refrigerated, fragile, leaky products is really tough. The profits are in dry goods, drugs, supplements, and prepared foods.

This is true about much of the US farming system. Government subsidies have completely broken the free market.

What is happening seems to me to be retribution for an industry ripe with bad practices like overusing hormones and steroids, and abusing cows...

It's a shame that milk farmers got to bail out without being held responsible. The fast growth in alternative milk was driven by bad practices by the dairy industry, and when unethical behavior is driven by shareholder expectations, it only gets worse.

We need to stop supporting in and investing in companies that poison food supplies, otherwise we're literally suffering for the profit growth that that creates.

“Supermarkets sell food staples such as bananas or milk at less than the cost at which they were purchased in order to draw customers to their business. These items are typically strategically placed far from the entrances of the store to enhance this effect. In the case of milk, supermarket chains often refuse to pay market rates to avoid making a loss.”

https://en.m.wikipedia.org/wiki/Loss_leader

> I’ve heard that grocery stores sell milk for less than they buy it for just to get you into the store, because they know you will buy other things.

I wonder if this is why they always put it in the back of the store? That way you have to walk through a vast array of higher margin things that you might suddenly decide you need on the way to and from picking up a gallon of milk.

Yes. Same deal with Eggs, and why they have all the candy at the registers. And why they rearrange the store occasionally.

OMG that rearranging of the store makes me so angry. Just when I get a system down for getting in, getting what I need to get off my list, and getting out and they throw that monkey wrench in.

That and using stacks of items as road blocks in the aisles to slow me down in front of higher-margin items. They don't need roadblocks with my pokey-shopping neighbors who stand in the middle of the aisle and stare at the two boxes of white-label pasta in each hand, attempting to calculate in their heads which one is the cheapest per noodle (my dad and grandmother being chief offenders here) all the while completely oblivious to my nasty glares because I just want to get past them so I can get to the sauce and move on.

I used to be weekend staff at a clothing store that changed layouts every week. Every weekend, I'd have to relearn where everything was.

Candy is by the registers because candy companies know impulse buys at the registers are a big factor in sales and they pay (indirectly via profit margin?) for that place.

There's a few reasons. Oftentimes the milk cooker is refilled/restocked from a walk-in cooler behind it accessible only to employees, and it would obviously be difficult to put this anywhere other than the back wall. I suspect it's also easier to run the utilities for freezers and coolers around the perimeter of the store and then down a few aisles.

Probably not. There's a more practical reason in most big stores: the shelves where the dairy items are displayed are the front wall of a refrigerated room. This way the product can be placed directly from behind, and never taken out of the cold.

And in a store where the cases are stocked from the front, they need to be up against some wall so that they have access to electrical outlets (and maybe drainage for the compressors, depending on the nature of the case).

That is a factor. As others have pointed out, having a fridge at the back is a useful logistic factor.

~20 year ago I heard about stores putting milk up front for those who just wanted milk quick. If you looked though the milk in front was more expensive (different bar code) than the milk in back. This hints that getting people to the back is part of the reason. I haven't seen milk near the front of a grocery store in a long time though (I don't know why).

dairy farmers have spent well over a century fighting the free market.

I've been buying Horizon whole milk for awhile because the cheap milk gallons taste watered down. The price difference is large (~$5 vs ~$2.50), but the milk tastes way better.

> Horizon said the added protein comes from “organic milk protein concentrate made from high-quality complete proteins naturally found in milk”.

They are adding extra concentrate to the milk. That's why it is 12 grams of protein per cup instead of 8 grams as it comes from a cow's udder or 2.5 as it comes from a human breast.

You could probably achieve the same effect by adding powdered milk to liquid milk.

In the United States, the dairy industry is heavily subsidized, there was a brouhaha early in the Trump administration about USA versus Canada dairy subsidies prior to the NAFTA trade deal being replaced. The cost to consumers in the USA should be higher without subsidies but who knows what all the consequences would be since this has been going on for so long.

Reply on news.ycombinator.com