The Return of Postum:  PracticalDad Price Index – July 2012

One of the concepts that Econ 101 students learn is that of the inferior good, which isn’t actually a comment upon the quality but rather it’s affordability versus other goods.  In other words, an inferior good is one that’s used to replace a more expensive or unavailable one when times get tough; Spam is a classic example as sales generally rise during periods of economic downturn and folks move away from more expensive meats to make the budget work.  When times improve, then the sales scale back accordingly.  In today’s environment of rising food prices, Postum would be such an example of an inferior good.

Postum was created by CW Post in the 1890s as an alternative to coffee, which he disliked because of the caffeine content.  In it’s life – it was finally discontinued by owner Kraft Foods in 2007 – the formula was basically toasted grains mixed with molasses.  Although it didn’t taste like coffee nor was it billed as a coffee substitute, Postum sales skyrocketed in the World War II years as real coffee was rationed and millions of Americans shifted to Postum in lieu of the bean.  My own recollection is that it resided in my grandmother’s cabinet and I recalled seeing the bottles in out-of-the-way sections of the coffee aisle shelves until they simply vanished.  America’s love affair with coffee has flourished and one of our most expansive corporations revolves around setting up coffee shops; we have no concern with caffeine as our youngsters swig Mountain Dew and the teens graduate to Monster, Venom or Rock Star.  Postum simply couldn’t compete.

But Postum will be making a comeback in the near future courtesy of former drinkers who bought the trademark and did the formulary work to get the taste right.  There are certainly going to be those who drink it for the taste but I suspect that others will try it as an alternative to coffee for reasons of cost.  When the PracticalDad Price Index began in November 2010, the cost of a 13 ounce store-brand caffeinated coffee can was $2.96; had the packages not been downsized to either 11 or 11.3 ounces, the equivalent cost would be $4.43 for the same 13 ounce can – an almost 50% rise in only 20 months if you account for the downsizing.  If you’re paying less for a can of coffee than the average here, it’s probably because that can is less than the old standard 13 ounce can. 

What happened with the marketbasket from June to July 2012?  The index level increased again from June’s 106.49 to 106.77 (November 2010 – 100.00) so that the cost for the basket is 6.77% higher than November 2010; looking in prices for the food component of the basket alone – 37 of 47 total items – the index rose to 110.32, more than half again as high as the full component. 

As much as I love coffee, I probably will try a cup of Postum when it returns.

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