The Oatmeal Markup

I don't really have a problem with new, more convenient ways to buy food, particluarly when it is healthy food, but I noticed the markup on pre-packaged bowls of instant oatmeal and had to share the math.

About a year ago, I considered writing an article which compared the price of oatmeal in a can to the price of oatmeal which was individually packed in envelopes. The individual packets were 78% more expensive, but that was only 11¢ per serving, so I didn't think it would be a very compelling article.

Quaker has launched these single-serving oatmeal cups. To prepare them, you can either pour in some boiling hot water, or use cold water and heat them in the microwave. They are $1.58.

Oatmeal is great, but that seemed like a pretty big markup, so I checked the price of envelopes in the same store.

Just as I had remembered, the box of ten oatmeal packets was $2.50, making a single envelope 25¢.



I had already guessed, but I had to double check it myself. The envelope contained exactly the same amount of oatmeal as the bowl: 1.51 ounces.

The photo above is authentic, and the bowl and envelope are labelled with their weight, so this was just verification.

The pre-packaged bowl of oatmeal was filled with just 25¢ worth of oatmeal, marked $1.58! That's $1.33 for the styrofoam bowl. Amazing.

They sell ceramic bowls for $1.

Keep in mind that this is unique to oatmeal. The same store had individual servings of cereal for 48¢. This two-ounce portion which was available in big bags for 31¢. So in this case, the "comes with bowl" option was only 17¢ more.

What went on at Oatmeal headquarters that they decided to launch a $1.50 cup of oatmeal?

Here are my guesses:

No one else was doing it, so they won't have competition for this exact product McDonalds began selling a bowl of oatmeal for $2.00. The weird bowl-cup will probably fit in your car's cup-holder, distinguishing it from a regular 25¢ bowl of oatmeal you could make yourself.

I don't have anything against a new way to package food. It actually boosts the perceived value of my bowl of oatmeal.

Update

I noticed this same store sells bulk instant oatmeal for 62¢ per pound.

A 62¢ pound converts to 6¢ per 1.51 ounce serving size. This is unflavored oatmeal, so it isn't directly comparable to the 25¢ envelope, but it is so breathtakingly cheap, I thought it was worth mentioning.