Secret Documents Show Pepsi and Walmart Colluded to Raise Food Prices
thebignewsletter.com
thebignewsletter.com
Companies like Kroger are so big they dictate the purchase prices from farms. The farmers were better off in the past with multiple competitors creating a bidding war. Same with consumers, products had to be priced right to win their business.
A company I work for had to give free engineering labor in millions of dollars to get access to one of the largest retailers in the USA. Too big not-to-do-business-with harms everyone except the retailer.
That wasn't always true. The Robinson-Patman Act made it illegal to give preferential treatment to large retailers specifically in order to prevent what we're seeing with walmart and amazon today. The US just stopped enforcing the law (and also anti-trust laws that would have protected local/small businesses) so here we are. At any point the US could decide that enough is enough and fix the situation but we'd probably have to make it actually illegal for corporations to bribe government officials before it stands a chance of happening.
"Legality" has never stopped big companies from doing these things. Google, Apple, Meta, etc has been receiving fines all day long and they still continue what they do.
Fines becomes a business calculation. Not a deterrent, not if it matters to the big corporation. Which at some scale, it will become cost-effective.
I suppose it scales upward infinitely.
There's the problem. Australia doesn't scale... not the fines.
In Australia, there are a lot of rules, a lot of fines but not much to gain.
An irredeemable company/ownership will ultimately lose control over time.
Price collusion is illegal too, but happens all the time. There being a law for it just makes the rare fine a cost of doing business.
Noticed it a while locally, and national data agrees. If you want to shop for cigarettes, shop in low income, minority areas. [1] Cigarette companies specifically target stores with regular, habitual, high-income smokers for high prices and lack of discounts, while offering significant bargains in stores less than a mile away. [2]
[1] https://pmc.ncbi.nlm.nih.gov/articles/PMC6689253/
[2] https://truthinitiative.org/research-resources/tobacco-indus...
Seriously, though: I cannot believe how high and how far these utterly dogshit arguments flew without pushback and the amount of damage that consolidation has done to the American Experiment. The best time to get a Lina Khan in the FTC was 40 years ago but the second best time was 4 years ago. I just hope the next president picks up the project... though I'm sure the (by then) trillionaires will do everything in their power to stop that from happening.
I was young and dumb enough then not to know that, for example, 7-Up and Sprite were not independent soft-drinks. I assumed every flavor of soda was its own company. I soon started to notice the drink pattern based on whether they had Coke or Pepsi. Those two owned all the other flavors—and they each had their own variant of the other's.
I was told too by management that we only bought Pepsi drinks. Again, native me thought, "Why not have both Coke and Pepsi and let the customer decide?" I am not sure whether there was a pricing issue that prevented management from buying both—like the loss of a discount for going Coke-only or whatever.
Of course you always saw signage, etc. around the restaurant with Pepsi logos (or Coca-Cola logos at other restaurants) so you knew there were gifts in other forms that one of the two would entice the owner with.
What a slow growing up I have gone through since then. It seems like the kind of thing they ought to teach in primary education.
To give an example Yum! brands (KFC, Pizza Hut, Taco Bell, etc) was formed as a subsidiary of PepsiCo. Although PepsiCo has divested from Yum, their pre-existing relationship is why these restaurants only serve Pepsi's soft drinks.
Deal-making is also why you see patterns like this emerge in other places such as convenience stores that only sell beverages from the Coca-cola company (i.e. higher volume sales from just one supplier yields a better discount than splitting sales across multiple suppliers). It's relatively rarer to see more than one beverage supplier at a restaurant, club or convenience outlet.
I presume, but don't know first-hand, that for built-in coolers you want stocked by the distributor, they'll also require segregation. Frito-Lay distributors operate similarly--they'll come in and stock your shelf if you want (I dunno if there's a sales premium), but typically they'll require the Frito-Lay products be segregated, and they'll provide branded shelving if you want.
https://www.coca-colacompany.com/about-us/leadership/roberto...
Or is that just urban legend?
The only restaurants I’ve ever seen selling Coke and Pepsi were in less developed countries…
Because over here in the UK, every shop I've seen that sells soft drinks sells both brands at the same time. Probably alongside a bunch of others.
Then again, the branded coolers seem to be more of a thing in restaurants and takeaways rather than shops.
That being said there is one popular gas station chain around here that historically sold Coke and Pepsi products in their fountains but in the past decade or so they’ve switched to exclusively Coke products in the fountains (but they still sell bottled Pepsi products)
Wait what? What do you mean by convenience outlet? We must have different definitions.
If you want to, say, have a student group sell cookies or whatever, the provider has to approve and you have to pay to host it.
The contract is for 10 years. No freaking way somebody signed off on that without money under the table.
It is truly an awful contract, with no benefit at all to the employer that I can see. Like you, I conclude that some executive must have gotten kickbacks for signing this.
The benefit is having an operating cafeteria (i.e. an amenity) for a guaranteed period with little or zero out-of-pocket expense other than providing the space. Unless there's obviously high-demand (coffee?), no catering company is going to commit to a long-term contract without ensuring some minimum volume to maintain staffing. Anything food related typically has ridiculously slim margins on average, especially when you count all the failed projects.
Catering is often an exception, but not this kind of daily staffed in-place catering. The most profitable kind of catering is where you can prepare food offset for discrete (though hopefully recurring) events across many (hopefully repeat) clients, and where you can quickly ramp up or ramp down staffing and facilities to minimize recurring costs.
Coke used to sell their high volume customers a different syrup, and give them different equipment to pour it, that was incompatible with the low volume customers equipment, to try and stop this
Why? Is it that hard to imagine pepsi doing it in an above-board way, eg. giving a discount to the university directly?
Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
If I was working a cushy admin job, I'd need way more bribery than $5 worth of coffee and doughnuts to intentionally select a worse vendor, especially if the decision would negatively impact my colleagues and get me flak.
>Why is it so hard to imagine people who work in education would have flexible ethics for personal gain?
Because if you read the other comments, there are perfectly reasonable explanations that don't involve graft. Jumping to "bribe" every time there's bad behavior is just lazy thinking and means you don't actually figure out what the root of the problem is.
Right. I'm sure, in spite of this and the decades of overwhelming evidence, this was all just a silly coincidence, and they can lower food prices now.
Edit: I'm shitlimited to five posts per X number of hours, so I'm going to respond here: the evidence is in TFA, thanks.
Where's all this "overwhelming evidence"? So far the only that's presented is "my university is pepsi only so there must be something shady going on" and "vendors buy me coffee so there must be administrators corrupting themselves and risking their 6 figure jobs for $5 worth of inducements"
edit:
>Edit: I'm shitlimited to five posts per X number of hours, so I'm going to respond here: the evidence is in TFA, thanks.
Searches for "bribe" and "kickbacks" don't turn anything up. If you're talking about the unsealed FTC complaint, that's anti-competitive behavior, but not the "kickbacks" that OP was talking about (ie. some administrator abusing their position of trust to personally enrich themselves). Both are bad, but they're not remotely comparable. For one, in the case of kickbacks, the organization and its members are harmed (through worse contracts), whereas for whatever walmart and pepsi agreed to, both benefited.
But a lot of people are poorly paid and free coffee is nice.
It might not be enough to select a worse vendor but if two are equal it’s easy to pick the one with the cute sales representative who knows how you like your coffee.
Then there is the leadership who plays golf together and use the company card to buy gifts (booze) for the deciders.
It’s not bribery it’s just subtle influence;)
And it’s everywhere, it’s the same at the various higher education colleges I worked at.
By bringing this up in a thread talking about kickbacks, it sounds as if you're trying to equate the two. Please don't equate this to a "kickback." It's not what that is. There's real standards to what denotes bribes and kickbacks and that's not what those are.
> flexible ethics for personal gain?
If you let the donuts influence your judgment, that is an ethical problem -- I agree. But if you operate in your organization's best interest you can enjoy the coffee and donuts without remorse.
The buyer at the university could just be doing their job, signing contracts to ensure (ideally) stable vendors and a good price by signing such a long contract term.
There's a bunch of pricing stuff (typically the bottler sells syrup and rents dispensers and may supply drinkware, and you get discounts on everything when you buy more syrup, and you get advertising subsidies when you put the brand logo in your ad, etc), but there's also logistics. More options means a bigger soda fountain and probably more space storing syrup.
I'm not sure I've ever seen mixed brands in a single dispenser (other than 7up+DrPepper which is bottled regionally by Coke bottlers in some regions and Pepsi bottlers in others; so you might see Coke with 7up and DrPepper or with Sprite and MrPibb). But, rarely, I've seen dispensers from both. Mostly at convenience stores and also the Yahoo employee cafeteria at the Sunnyvale HQ on First Ave (which they left some time ago). Some restaurants that don't have a fountain will stock cans from multiple brands, too.
All that said, from my life experience, very few people express a strong preference, giving customers a choice probably isn't worth the effort.
Since the same 2 liter was like $1 at the grocery store, I thought we were gouging costumers and making bank on them, and figured the manager was being dramatic whenever inventory counts were off by a few.
Turned out we had a really raw deal with Coke, and were only charging like 25-50¢ more than we bought from for. And we were also required to order them from the distributor, to prevent us from stocking the cooler with cheaper ones from the grocery store.
Restaurant owners will sign a contract with a distributor to buy only from them, and in exchange get discounts, free equipment rentals such as drink fridges and beer taps, and things like sunshades, tables and chairs, signage, etc.
Neither Coke nor Pepsi brew or sell beer.
https://finance.yahoo.com/news/dr-pepper-end-partnership-cok...
- directly owned and managed by the brewery
- owned by the brewery and leased to a manager, like a franchise
- independent, but contracted exclusively
- genuinely independent
Contracted pubs may also have limited supplies of "guest ales". Usually there's sufficient local competition to keep the pubs good, but local monocultures can also be a problem.
I'm a habitual enough soda drinker that I'm a six-pack-a-day diet soda drinker (don't judge me, at least it's not Red Bull). I notice that there's vendor collusion at Walmart for months at a time where the Pepsi six-packs will typically go on sale for a few months at a sub-$4 to $5 price (currently it's $4.98) while Coke packs will be $5-6 off sale.
Cycle three to four months and Coke will enter the $4 position and Pepsi goes back up to a full retail price for the next quarter.
I've always seen the 'cycle' of the two competitors constantly hitting a 'sale' price across various retailers.
Even weirder, the drinks that I flavor myself taste way better than the ones in the store. I suspect they have been titrating their flavoring down over time. Root Beer I make myself using drink powder tastes way better than the ones from the store. Same for grape and orange sodas.
Sadly for this RedBull drinker, they never go on sale, at all, ever, anywhere.
Our country and civilization is slowly turning into organized crime.
https://waldenconsultants.com/2020/04/13/yet-another-study-s...
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
I hate to say it, but was he proven wrong? People are still buying junk food and soda (their primary products) despite prices going up. Looking at Pepsis profit margin, it seems to have hovered between 9.5% and 10.5% since 2021.
And even if people buy a lot of junk food, they might have bought competitors’ junk food. Laws are still laws even if you don’t like the people the laws protect.
Pricing discrimination combined with monopsony(single large buyer) or monopoly ( single large seller) powers is not market efficient. It leads to higher prices by end consumers. Price discrimination via collusion + Walmarts monopsony in grocery industry violates that 1930s act and is illegal
First, that made me raise an eyebrow.
> ...and failed.
Then, that made me laugh.
> And now there’s a political and legal storm as a result.
Finally, that made me sigh, because nothing's gonna happen. The "storm" will pass, as it always does.
Why? Unless there was some kind of payola, this is doesn't make sense.
But, beyond that, while logically voters should vote against politicians that favor businesses over them, they often appear to do the opposite. They simply gain the label of "business friendly".
Capitalism in practice: a relative handful of rich people cooperating with each other to extract as much money as possible from the middle and lower classes.
You can see which version of capitalism this document supports.
The "fiscally conservative" aspect of the Republican party (and the Democratic party to a lesser degree) don't want people to think of capitalism-in-practice; they want happy consumers who think that competition is still a thing. Since this document clearly goes against that narrative, it must be suppressed.
A couple other ways of looking at it come from Bataille, Odum, Prigogine or Schmitt.
no, not clear at all.. it is a system that filters. "rich people" go broke all the time, Britain too.. There are serious structural problems certainly but that does not describe them
Pepsi is exchanging profit for market-share. Be serious. Everyone else is just charging the standard price.
Market failures ought to be accounted for with regulation (they often are, that's what Liberalism is for), but this is not one.
The unessential garbage fuelling our obesity crisis has no place in the conversation about the affordability crisis whilst policy-makers and armchair experts are mulling a sugar tax, which would just raise the price. Notwithstanding, profit margins at grocery stores are not large in the first place. The reason profits are breaking records is that population is also breaking records, and customers are spending more on boutique animal alternative or organic boxed products. Margins on produce are as thin as ever. Canned black beans and soup are not making their billions.
If it were to be enforced uniformly and aggressively it would be devastating: Every negotiation between a supplier and a purchaser at every level is potentially a federal crime!
If it were to be enforced capriciously, it would put unchecked power over everyday commerce—again at every level—into the hands of the FTC and its political masters.
No thanks. Repeal it so we can stop hearing about this “one neat trick to roll back neoliberalism!”
They write the rules.