Price gouging: A bitter taste
by Adam Robinson
A customer, who shall not remain nameless, accused us of price gouging. So, here is a short missive mostly about micro-economics, rather than macro-economics, even though the latter is more interesting.
Macro. There has been 50% rise in global wheat prices and some other agricultural commodities since July 2021. Though some parts of the world would like to blame the horned devil known as Vladimir Putin, the rise pre-dates the war in Ukraine and is as much to do with climate change, increased affordability of meat and the general increase in energy prices, as the temporary blockade of Black Sea ports. Food inflation, as we know, hits the poor harder. There is also increased poverty due to lockdown policies. Together this has increased the numbers of those counted as hungry by over 150 million in the last two and a half years to 860 million people.
Micro. That is the Glenwood Bakery, its staff and customers. The price of flour to us has increased from R110 per bag to R175 per bag in twelve months. We buy, on average, 60 to 70 bags a week. We haven’t increased the price of our breads etc for nearly three years. I’ll leave you to do the maths. Our bread prices are about to go up by about 10% to 15%.
We already have complaints from some customers about our prices and I expect many more. Mostly directed at our long-suffering front of house staff. My feeling is that they need some ammunition to defend the organisation that they choose to work for. There is food price inflation. You know about petrol. Do you know about the 20% rise in taxi fares? Our glass bottles have gone by 30% so far this year (we have 5 months left). You know about electricity. Rent has a solid 8% to 12% rise annually.
Stats SA puts inflation at 5% pa. Our business input inflation is running at more like 20%.
The customer who inspired this newsletter also made us aware that he is keeping a sharp eye on our prices as compared to Woolworths (it’s a chain of grocery stores).
Me too.
A recent trawl through a Woolies and the Glenwood Bakery.
Respectively:
White sliced R18, our batard R20
Old sliced white sourdough made with industrial flour R42, our white sourdough at twice the size and, as always, stone ground flour, R35
Nasty par-baked ciabatta, R50, our ciabatta R22
2 litres of milk R32, our milk R14 per litre (they are both from Fairfield dairy)
Hummus in plastic tubs with the charm of added E500 R40, ours in glass R25
Large free range eggs R86 for 18, ours R3 each
I’m happy to be accused of being a shit small business owner but not as one who is charging excess prices.