Cost markup is standard in retail. In some products, it seems extreme. The economics of a favorite snack.
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To account for that success, many experts point to Americans' peculiar snack-food psychology. Consumers equate snack foods with relaxation, they say. The food forges an emotional connection, largely because people consume it during memorable events - from birthday parties to Super Bowl gatherings.Skip to next paragraph
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"If you look at sales, snack foods go up whenever there's a holiday or sports event," says Ann Wilkes, spokeswoman for the Snack Food Association in Alexandria, Va.
Snack foods even draw regional loyalty. Ms. Wilkes cites central Pennsylvania, where the local Herr's and Utz potato-chip brands have become cultural institutions.
Allegiances seem to run even deeper with popcorn.
The snack food rose in prominence during the 1930s and World War II, when families rationed sweeter, more-expensive products. Popcorn was affordable to nearly everyone, says Andrew Smith, author of "Popped Culture: A Social History of Popcorn in America."
It's a fact that seemed to jibe with the nation's democratic values. The low price brought popcorn into baseball parks, circus tents, and movie theaters - venues that drew Americans from every class.
Seniors and baby boomers are now the most ardent purchasers.
"Everybody I knew went to movies when I was young. There's a psychological connection to the popcorn experience [for us]," says Mr. Smith.
The nostalgia has built to the point where multiple generations of Americans will now pay $4 for popcorn without thinking twice, according to Professor Urban.
"There are certain things that people learn through their lifetimes that they're socialized to do, says Urban. "Perhaps one of them is to pay $3 or $4 for a tub of popcorn, because that's just what's done."
Popcorn pricing is not entirely unreasonable, some defenders say. They suggest that customers in the theaters and supermarket are not just paying for kernels, but for convenience.
According to William Harris, an economics professor at the University of Delaware, most consumers are not aware of the intangible costs of popping their own kernels. Self-popping requires more time, the use of an oven and other kitchen supplies, and a cleanup component.
"If you take all those costs, you raise the cost of homemade popcorn considerably," says Mr. Harris, who studied snack-food inflation in his essay "Captive Audiences and the Price of Popcorn," published in the Pennsylvania Economic Review.
The price of popcorn at an event takes into account similar burdens, including employee theft, labor costs, machinery, and the liability of leftovers, he says. At ball games in particular, popcorn is more difficult to sell because it is bulkier and harder to carry in large quantities than hot dogs.
Harris adds that moviegoers are a captive audience, and that the theaters have a monopoly on concessions. In 1999, the average price of a medium popcorn in New York City theaters was $3.65. The average cost of a large popcorn was $4.39.
Still, Harris believes high popcorn prices are a consequence of theaters' need to cover overhead and compensate for marginal ticket profits, rather than a baldfaced effort to drain moviegoers' wallets.
The studios' take amounts to about 50 percent of theater ticket sales per film, according to Paul Dergarabedian, president of Exhibitor Relations, a Los Angeles firm that tracks box-office receipts.
To stay in the black, theaters pump up the price of soda, candy - and especially popcorn.
"They buy their concessions for whatever wholesale prices they can," says Mr. Dergarabedian. "Whatever they can get over what they paid is where they're going to make most of their profits."
(c) Copyright 2001. The Christian Science Monitor