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A small % of what you see on price tags at the grocery store or restaurants is for the food itself.
The majority of food costs fall under something called "Marketing Share."
Here's an example of how that impacts you.
The majority of food costs fall under something called "Marketing Share."
Here's an example of how that impacts you.
When you buy an item at the grocery store, about 14 cents for every $1 you pay goes to “Farm Share,” or to pay for the actual food itself.
86% goes to “Marketing Share.” But “Marketing” doesn’t mean what you think.
86% goes to “Marketing Share.” But “Marketing” doesn’t mean what you think.
Marketing Share = every industry group involved in supply chain.
Here are some specifics:
➡️ Avg of 15 cents out of every $1 you spend is for “Food Processing”
➡️ 3 cents “Transportation”
➡️ 2 cents “Packaging”
And 3 cents for Marketing / Advertising
What does that mean?
Here are some specifics:
➡️ Avg of 15 cents out of every $1 you spend is for “Food Processing”
➡️ 3 cents “Transportation”
➡️ 2 cents “Packaging”
And 3 cents for Marketing / Advertising
What does that mean?
This cost breaks down across 4 main areas: Imports, Property Income, Output Taxes & Salaries.
As an example, in Marketing & Advertising, about half of the 3 cents goes to pay industry Salary & Benefits.
Why should you care?
As an example, in Marketing & Advertising, about half of the 3 cents goes to pay industry Salary & Benefits.
Why should you care?
Over the past 2 years we've been hearing more about how consumer costs are going up.
Look at wheat.
Between 2020 and 2021, the cost of wheat rose 80% according to the IMF.
Why?
Look at wheat.
Between 2020 and 2021, the cost of wheat rose 80% according to the IMF.
Why?
Broadly - supply chain issues.
But also environmental ones (such as ongoing drought in the US & other parts of the world).
Wheat supply recently dropped to the lowest levels in 5 years.
And cost of baked goods, like doughnuts and pies, increased 10%.
But also environmental ones (such as ongoing drought in the US & other parts of the world).
Wheat supply recently dropped to the lowest levels in 5 years.
And cost of baked goods, like doughnuts and pies, increased 10%.
Now with the Ukraine - Russia conflict, this issue could worsen.
The 2 countries produce and export almost 30% of the world's wheat (primarily to Egypt, Turkey, Bangladesh & Nigeria).
The 2 countries produce and export almost 30% of the world's wheat (primarily to Egypt, Turkey, Bangladesh & Nigeria).
Concerns have already led multiple factories in Ukraine held by companies such as Nestle and Grupo Bimbo (the largest bread manufacturer in the world).
Not only the cost of wheat would be impacted, though.
Not only the cost of wheat would be impacted, though.
Ukraine and Russia are also major global suppliers of seed oils, corn, flour, fertilizers and other key agricultural goods.
In the US, bread wouldn't be impacted as heavily since food commodities account for only about 15 cents on every $1 spent on groceries.
But...
In the US, bread wouldn't be impacted as heavily since food commodities account for only about 15 cents on every $1 spent on groceries.
But...
Higher cost of wheat could mean higher cost of livestock feed.
And that would lead to increased cost of meat and dairy as well. Animal feed already increased 10% in Spain during the first 2 days of the war.
So what's stopping other top producers of wheat from filling the gap?
And that would lead to increased cost of meat and dairy as well. Animal feed already increased 10% in Spain during the first 2 days of the war.
So what's stopping other top producers of wheat from filling the gap?
India, for example, is the 2nd largest producer of the crop in the world.
The country consumes it mostly domestically, though, and high taxes are limiting ability to ship out, despite demand.
The country consumes it mostly domestically, though, and high taxes are limiting ability to ship out, despite demand.
The World Food Programme predicts overall global food insecurity and inflation will only worsen, and the most affected will be the poorest in our global societies.
But we would all shoulder higher costs as a result.
But we would all shoulder higher costs as a result.
Overall it's yet another example of how interconnected so many things truly are in the global community.
If you enjoyed reading this thread and are interested in more about marketing and business, follow me: @ccmarce_writes
