• Jeff Matthews

“Stuff” Rising

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Not that I would know this from personal experience, mind you, but Coors—at least in one part of the country—has raised the deposit on their beer kegs from $12 to $30.

The obvious problem for Coors, which followed recent moves by Anheuser Bush, is that low-tech beer kegs are made of high-tech stainless steel, the price of which is flying. Consequently, even hung-over thieves could do the calculation that the $150 replacement cost of an item sitting in their garage was more than ten-times the deposit.

So now the ratio is only five times.

Whether the near-tripling in the deposit charge solves the Mystery of the Disappearing Kegs, time will tell. As percentage price increases go, however, it ranks right up there at the top of the list of price hikes currently excluded from the “Ex-food and energy” calculations of the Federal Reserve Board, who presumably drink more sophisticated elixirs than cold brew anyway.

Still, the fact that prices on all manner of stuff—to use a highly technical economic term—are going up, credit squeeze or not, is no new news to anybody who actually consumes the stuff.

A casual glance at my Bloomberg confirms this:

Wheat Rises to Record as Ukraine Limits Exports,” reads one story in the top news page.Also rising is the cost of the war in Iraq: “Pentagon Seeks $190 Billion for Iraq in 2008, Most Since Conflict Started,” reads a second headline on the Bloomie.

There’s even bad news for Coors’ own keg costs: “Vale, Rio, BHP May Win a 30 Percent Increase in Iron Ore Prices Next Year,” reads a third headline.

But weep not for Coors and its brethren.

Australian wine and beer giant Foster’s Group is raising prices—and they’re sticking. As Foster’s CEO told Dow Jones recently,

“We put our prices up across the board in August between 4% and 11%….Those prices have stuck and competitors have followed. That’s a pretty good sign.”Indeed. Stuff rises.

Jeff Matthews I Am Not Making This Up

© 2007 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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GENERAL

The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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