Sunday, 13 April 2014

Organic foods/Whole foods

My mother was just skyping  my Auntie who lives in America and i overheard them talking about Whole Foods and organic foods. I jumped in and asked my Auntie who said she purchases all of her groceries from Whole Foods "If i was Wal-Mart and i was to tell you that we're thinking of introducing organic food in our stores. Further, i tell you, that to do so, it will increase our costs by 5% but I'm going to charge you 20% more, would you still buy?" She said "Yes, noting that she already pays 25% more to buy organic". I then said, "okay, but what if i was to tell you that inflation is going to be 3% this year but we're going to increase our organic range by 4.5%, would this bother you?" She said "Not really". This is an interesting quality, to be able to increase prices without inverse sales pressure. I believe Coca-Cola exudes such a quality (partly i think because their products are relatively cheap. For example, a 2% increase won't look like much in nominal terms. However, a product which costs 150,000 with the same percentage increase might be attention grabbing). I also found this very interesting because as I'm looking into Vita Life Sciences who sell a premium product. I wonder, as they expand their operations into Asia, how the rise of their middle class will impact their sales. This is a question I've been asking myself for weeks.

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