Food giants are not exactly a household name these days, but they’ve kept prices low enough that the average American could afford to buy a gallon of milk and a cup of coffee a day, according to an exclusive study.
And they’re doing it by targeting specific segments of the US consumer market.
BidOn, the global food retailer, is one of a handful of US retailers to have successfully adapted to changing tastes and prices for the new millennium, with its high-quality, high-priced, low-cost products selling for as little as $2 a cup.
The study, conducted by the U.S. Department of Agriculture and the USDA’s Center for Nutrition Policy and Promotion, surveyed more than 500 Americans to find out what consumers are buying, who they are buying it from, and the factors driving the price gap.
According to the USDA, the average price of a gallon-and-a-half of milk is $2.75 today, down $0.01 from its peak in 2017.
However, the USDA report shows that the price of milk has fallen more than 60% since 2011, to $1.15 a gallon in 2018, from $1 a gallon.
The average price for a quart of coffee is $1 in 2018.
So, if the average coffee-and_cup of milk cost $2 in 2017, the price dropped by almost 60% from $2 to $0, the study found.
Food companies are also shifting from buying in bulk to buying in smaller batches to reduce costs, said Brian L. Pyle, chief executive of BidOn.
“I’m always trying to keep costs down and reduce wastage,” Pyle said.
Pyle said the company is focused on increasing the cost of a cup and gallon of coffee and on reducing waste and waste management costs.
One of BidOne’s key ways to do this is by focusing on a very specific segment of the American market, the middle class, he said.
The middle class includes people in their 50s, 60s, and 70s, he explained.
“They are the people who are really, really reliant on their kids for their nutrition,” Pyles said.
“They want to be able to get a cup on their way to work or a meal at home, but also, they want to have a good quality of life and they don’t want to feel they’re getting a little bit of extra money.”
In fact, the survey found that BidOne was one of the most sought-after retailers among the middle-class in 2018 because of its premium-quality coffee, which is often sold at more than $2 per cup, compared to the $2 cost for most other beverages.
Many other food companies, including Nestlé, Costco, and Trader Joe’s, have also tried to adapt to changing consumer tastes, Loyola University food policy professor David Ruhlman said.
“A lot of those companies have done some pretty interesting things,” Ruhrman said, including buying in small batches and switching to bulk pricing.
“But I think BidOn is one company that’s really done a really good job of being very, very selective about what they’re buying and doing in terms of how they’re marketing their products and packaging their products.”
But while BidOn’s high-end coffee and milk products have a lot of potential consumers, the company has also focused on a certain segment of consumers who are buying in large quantities, he added.
“This is a very targeted market that’s been hit hard by the rise of the super-high-end,” Rundhman said of the middle and upper classes.
“It’s an opportunity to do some pretty aggressive stuff and really, you know, it’s a very profitable business.”
BidOne has been a huge success in the US, Ruhbman said: “There’s no question that BidOn has done a lot to make its product available in this market, which has really benefited the American consumer.”
The USDA said BidOn plans to spend $3.2 billion this year on marketing, advertising, and distribution to target these groups of consumers.
A BidOn spokesperson said the firm is focused solely on helping middle-income and upper-middle-class Americans, and has also worked with several organizations to promote healthy living and food access in underserved communities.
While the price advantage BidOn enjoys today is a great deal, the biggest benefit the company’s marketing team has seen in the last 10 years has been through the “sustainability of the food supply chain,” said BidOne CEO Robert C. Smith.
In a statement, BidOn said it has been working closely with USDA to reduce the amount of waste and the waste management waste it generates.