It's been five months since the cost of coffee (as a commodity) peaked in early March. Since then, coffee traders have seen the value of the heavenly beans drop by 27%. And consumers are finally beginning to see more pennies in their pocketbooks as a result.
And I say "pennies" for a reason. Last week, Procter & Gamble
But don't cry for them, Colombia. It's not likely that these companies will suffer any profit withdrawals. America's food conglomerates have a knack for cutting prices even -- or rather especially -- when commodity costs rise, and still boosting their profits. The secret is in the fine print on the comestibles' packaging.
Take your average coffee can. Right now, most cans lining the aisles of your local supermarket weigh about 13 ounces. Maybe 12 ounces for decaf, or 11 for a can of "Slow Roasted Special Supreme Hawaiian Blend," but you'll find your basic can of "Original" dry java weighing in at 13 ounces. Ever wonder how the coffee makers came up with that number?
It's not to equalize the size of packages sold in metric- and non-metric-system countries. Thirteen ounces translates to just less than 369 grams -- so there's nothing "round" about either number. One is as weird and unintuitive as the other. No, the real reason is what consumer advocates refer to as "product downsizing." You've probably seen it happening most recently in the dairy and ice cream sections of your local supermarket, where last year's rise in raw milk prices accelerated a trend among companies such as Danone
A similar downsizing phenomenon occurred in the coffee world. As prices climbed toward March's five-year high, the basic one-pound can we all grew up with gave way to the current collection of 11-, 12-, and 13-ounce containers. So whatever last week's price cuts may entail for consumers, investors need not fear -- their investments won't lose out from any price war here.
Fool contributor Rich Smith does not own shares in any company named above.
