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Why is soft drink cheaper than water?

· 3 min read
David Len
Producer, software developer

The popular theory is that soft drinks are cheaper than water simply due to "marketing" that lets them sell worthless water. Indeed, a company can charge whatever they want and you just have to pay for it.

Why must it that water, of everything, has to worth more than soft drinks? It seems irrational that adding an extra feature (that is sugar and carbon) to a commodity (water) devalues it.

What if we're missing something?

It's easy to just accept the "marketing" theory and complain capitalism lets people charge things that are supposedly free for more. Then, people can use this example to point out a market irrationality and extortion that a resource of necessity costs more than a recreational commodity.

I have a different theory that may not be revolutionary, and I suspect most beverage companies and wholesalers already know.

Hypothesis: Soft drinks are cheaper because its easier to distribute.

Carbonated water isn't just coincidentally popular because it taste good. It's also an engineering marvel.

When water is carbonated, its container gets pressurized. This means you can store a lot of them as a bigger cluster and its huge mass will not compress and ruin other carbonated products. It also means the containers can use less material.

In contrast to bottled water, they are not pressurized, so bottles can be compressed more easily. This is also why you never see canned pure water -- the lack of internal pressure means canned water can easily dent during transportation.

The efficiency of distribution that result from carbonation is why those cost savings get passed on to consumers, and hence why soft drinks are cheaper than bottled water.

What about beer?

In certain places, beer is also cheaper than water. Perhaps you can also use the marketing or cost distribution hypothesis, but it's not so obvious.

Perhaps, beer lasts longer while water may not stay fresh for long, and beverage companies priced the spoilage into the cost of the product.

How I could be wrong

While its an interesting coincidence, the distribution cost hypothesis is more plausible if bottled water and soft drinks / beer are sold at very thin margins.

If both products have almost equal high margins, then its more plausible the price is a result of marketing hypothesis.

"Why do you even care?"

I just think certain facts we take for granted may not be true. Its a very common question and "irrationality" we experience that we internalize that "it just happens".

Maybe it's not so much about marketing, hocus pocus, and psyops, but rather a physical reality and efficiency that comes from certain design choices.

If the cost distribution hypothesis is true, then it also makes me optimistic that there is a clever way to deliver value to consumers -- that at the same time also solves your own problems -- you don't have to trade for your own inconvenience / time / resources, or to exploit other people for profit.