This podcast episode explores the history of Coca Cola's pricing strategy, specifically focusing on the period when the price remained at a nickel for 70 years. Despite economic changes, including the Great Depression and wars, Coca Cola managed to keep its price consistent. The episode reveals that the price consistency was partly due to a perpetual contract with bottlers, preventing Coca Cola from raising the price of its syrup. Furthermore, a massive advertising campaign associating Coca Cola with the 5-cent price point and limitations imposed by vending machines that only accepted nickel coins contributed to the price stability. The chapter delves into the role of vending machines in Coca Cola's pricing strategy and the challenges faced in increasing prices. The episode also discusses the concept of "nickel Coke," a strategy where every ninth bottle in a vending machine was intentionally empty, forcing customers to pay an extra nickel for a full bottle. However, the introduction of inflation and the US going off the gold standard led to the demise of the nickel Coke. Despite its discontinuation, the legacy of nickel Coke can still be seen in Coca Cola's global presence and the concept of larger bottles offering a comparable price per ounce.
Main points
• Coca Cola maintained a consistent price of a nickel for 70 years despite economic changes.
• A perpetual contract with bottlers and a massive advertising campaign contributed to price stability.
• Vending machines that only accepted nickel coins prevented immediate price changes.
• The concept of "nickel Coke" involved intentionally leaving every ninth bottle empty to charge customers an extra nickel.
• Inflation and the US going off the gold standard led to the demise of nickel Coke.
• The legacy of nickel Coke is seen in Coca Cola's global presence and the concept of larger bottles at a comparable price per ounce.
