What�ll You Have to Drink? Lessons Learned at the Grocery Store

Dr. E. Bruce Godfrey
USU Extension Economics Specialist

The consumption of fluid milk (gallons per person) by consumers in the United States peaked in 1945 at 44.7 gallons per person (USDA/ERS). Per capita consumption fluctuated between 1945 and 1989, but since 1989 per capita consumption has declined each year. The largest decrease in fluid milk consumption has been in the consumption of whole milk which has been partially offset by increases in the consumption of flavored and skim milk. A large portion of the decline in fluid milk consumption is the result of increased consumption of other drinks. For example, in 2000 milk consumption in the United States averaged 22.6 gallons per person which is a decline from the 31.3 gallons that was consumed in 1970. The consumption of carbonated soft drinks more than doubled during this same period of time from 24.3 gallons per person in 1970 to 49.3 gallons in 2000. Comparable data for alcoholic beverages indicate that consumption per capita has remained essentially stable (wine and beer consumption has increased slightly while the consumption of distilled spirits has declined). Numerous factors have affected these trends, but the price paid is one factor that was of interest to me.

In an effort to compare these products I conducted a brief survey of five grocery stores in Logan, Utah on December 28, 2002. The same product, if available, was priced at each store. The results were a bit surprising and are shown in the following table.

Product Units Range of Prices
Bottled water 6 pack (16 oz. each) $1.36 to $4.39
Bud Light 12 pack cans $9.23 to $9.29
Minute Maid OJ gallon $4.38 to $5.99
Coca Cola 12 pack cans $1.66 to $3.99
Pepsi 12 pack cans $1.66 to $3.33
2% milk gallon $1.88 to $2.89
Milk chugg pint $0.65 to $0.99
Gatorade 64 ounces $1.97 to $2.99
Gatorade 4 pack (24 oz. each) $2.85 to $4.99

The only drink that was priced at essentially the same rate at all five stores was Bud Light. The variation between stores on the other product prices was surprising to me because I thought that these products would be consistently priced. This range of prices certainly shows that where these products are purchased can make a difference in the price paid. This comparison also indicated that one store did not have either the lowest or highest price for all of the products. In fact, a buyer would have to purchase these products at 3 of the 5 stores to have obtained the lowest or the highest total purchase cost. Further insight into the price of these drinks is obtained when they are converted to a per gallon basis.

Product Price per gallon
Lowest price Highest price
Bottled water $1.36 $4.91
Bud Light $8.20 $8.26
Minute Maid OJ $4.38 $5.99
Coca Cola $1.48 $3.55
Pepsi $1.48 $2.96
2% Milk $1.88 $2.89
Milk Chugg $5.20 $7.92
Gatorade $3.80 $6.65

The first thing that needs to be recognized is that the price per gallon is generally highest when offered as an individual serving (e.g., chugg, bottle or can). This generally reflects the costs of packaging, storage, spoilage and handling that must be incurred by retailers. Secondly, milk is commonly the lowest priced beverage except when soft drinks are on �special.� The drink whose cost surprised me the most was bottled water. In three of the five stores bottled water, when converted to a per gallon basis, was generally more than one dollar greater than the cost of milk. But, this was not true when milk was purchased in an individual serving (chugg) � it was one of the most expensive drinks surveyed. Many factors affect the drinks consumers purchase, but price is one that has an impact. The data above clearly show that competition for the consumers dollar is intense and that cost of getting a drink can vary widely. ©