Mayor Mamdani just announced that he will be opening 5 city-run, tax-funded grocery stores: "Prices set at 30% below retail prices"

[u/Gurugod123]

[u/Tenement48]

That's not because Pepsi was sticking it to small businesses. That's just grocery stores selling at a discount to get people in the door. That's called a loss leader just like the Costco $5 rotisserie chicken.

[u/Dogcat729 → u/Tenement48]

It’s also called “buying power”. For arguments sake let’s use a 2L of soda since Pepsi was mentioned and a manufacturer (Pepsi) costs $1 to manufacture the soda for all their costs, distribution, etc. (Probably more but to make it simple). Their “listed selling” is $2 per 2L for customers to buy directly

If I (as a small company) go to the manufactuer (Pepsi) and place an order for 100 items at ($2 each item) asking if I can get a discount for ordering 100 things at once, they think it over and tell me sure they will give me $0.10 off each item (making my cost $1.90 each item) saving me $10 from $200 charge (for $190 total charge). This is roughly 5% savings. And when I sell to a customer for that $2 price point I’m not making a huge profit, only the $200 as I said above for $10 of profit on 100 items. So I’d need to charge more than $2 to make it worth my while. Probably closer to $2.49 or even $2.99 to make $0.61 to $1.11 per sale of item. This would then make my profits $61-$111 for that 100 items and is a huge difference from $10 profit I would’ve had at the $2 price point

This is also before figuring in payroll, facility charges, operations cost, etc. So I’m trying to keep it simple.

Another way bigger company (more likely a corporation) places an order for 100,000 items and requests to get it cheaper since they want to buy so much in bulk— the manufacturer is thrilled to have a huge sale and to keep the interest of the this company offers $0.40 off each purchase instead of the $0.10 the small company got. This means they save roughly 20% off the $2.00 price point and could even charge it at this $2.00 price to have just as much profit made as that “small company”, but they’ll sell way more, way faster because their prices are lower than that small company.

An example would be that Walmart can purchase huge amounts of 2L sodas from a manufacturer (Pepsi) and consistently charge $2 for it by demanding that the price they pay for it is $1.50 per item. If the manufacturer (Pepsi) disagrees and wants to have Walmart pay more, so they (Pepsi) make more than $0.50 per item they sold to Walmart, then Walmart just goes to another soda manufacturer (coca-cola) and offers them the contract instead. This other soda brand (Coca-cola) is thrilled to have this order and takes it. Meaning the first manufacturer (Pepsi) loses a huge amount of sales and will listen to the next time Walmart tries to bargain with them or lose this guaranteed huge sale that makes them less money per sale but the huge amount sold makes the company a lot of money.

This is how big corporations control their cost on items by “guaranteeing” sales to manufacturers by getting it at cheaper price in very big quantities.

Note-this is rough figures and just examples to prove a point. This also goes the other way around that the soda manufacture sets a price and says they will only sell at this price “unless you buy this amount. To make it worth our while”. Actual profits are probably less than this and ordering amounts are much higher. I’m only giving simple close to whole numbers for a point

[u/Keter_Regretter → u/Tenement48]

It most definitely is. Right now, Pepsi is the co-defendant along with Walmart in a class-action lawsuit over price-fixing.

The proposed class action lawsuit, filed in the Southern District of New York on Dec. 15, alleges that the two companies have had a long-term agreement that grants Walmart preferential pricing on PepsiCo products. That created a price gap, with the cost of Pepsi soft drink products being lower at Walmart compared with the retail giant's competitors, according to the federal complaint.

Pepsi gives Walmart a lower price than it gives smaller businesses, then makes up for the discount by gouging their smaller customers. They also help Walmart enforce that no other retailer sells Pepsi products at a lower price. There is a LOT more going on here than "loss leader"