Why is coca-cola so expensive in Germany?

Matt asks this question and the answers in his comments section cite sugar policy and the VAT.  (Matt's comment, at #62, is the best of the lot.)  USA Coke also competes with free tap water, which is a no-no in Deutschland.  Here is a German site, GuteFrage.net, which asks "Wieso ist Coca-Cola so teuer?" but the answers do not impress.  Here is further German language discussion but again Armen Alchian it ain't.  This German Yahoo post considers the marginal cost of production.

I am more inclined to cite the elasticity of demand.  Here in the US of A people will drink three or four cokes in a row, maybe more.  Or they will buy many cans of coke for the whole family along with hot dogs, Twinkies, Hellmann's mayonnaise, and other utility-maximizing commodities.  But those high-volume strategies require a fairly low price.  I haven't lived in Germany for over twenty years, but my impression at the time was that you would drink one coke at a main meal with your food and that was it.  (You also didn't get very much in the Glas, but that's another story.)  They're weren't aiming for volume sales by lowering the price, so instead they would focus on the upper left part of the demand curve.

I don't know if Matt is referring to restaurants or vending machines.  In restaurants drink prices are arguably a proxy for enjoying the amenities, the table and the service of the wait staff.  If the wait staff have higher wages and benefits, due to European labor market regulation, the drink price might be reflecting that higher marginal cost, even if the MC of the drink itself is low relative to price.

People, can you help out on this one?


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