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Speaker 1: Ride oh seven twenty four. I hope you're following the

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Speaker 1: butter debate, specifically the cost Co part of it. Why,

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Speaker 1: because it's an insight into how the world works, especially

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Speaker 1: the economic world, and why Nikola Willis and her crusade

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Speaker 1: to convince us supermarkets are ripping us off might be wrong.

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Speaker 1: Willis cited cost Co the other day when she once

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Speaker 1: again reminded us after today's budget she's back to the

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Speaker 1: business on the supermarkets and looking to break them up

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Speaker 1: or twist their arms or regulate them where it hurts

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Speaker 1: so we can all feel much better about the price

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Speaker 1: of a trolley full of goods. What she knew, she said,

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Speaker 1: Whilst competition is good for prices, as I tried to

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Speaker 1: say yesterday, that's school cerdy economics, And although partially right,

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Speaker 1: isn't the whole answer. Butter at cost Co is ten

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Speaker 1: bucks a kilo. Elsewhere you can pay ten bucks be

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Speaker 1: half that in that very example as part of the story.

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Speaker 1: It costs different amounts all over the place on any

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Speaker 1: given day, depending on where you go or when you go.

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Speaker 1: It's a bit like petrol. Also a bit like petrol,

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Speaker 1: the end price is driven not by oil but by

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Speaker 1: international pricing. We pay international prices because we make the

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Speaker 1: stuff and sell it. It's how we make a living.

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Speaker 1: We should be celebrating this. If farmers weren't doing so well,

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Speaker 1: we'd be truly stuffed. Costco because they're large, and I

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Speaker 1: mean huge, as in globally large, they buy more of

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Speaker 1: anything than anyone else does here locally. Because of that,

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Speaker 1: their price per unit drops. Their margins are smaller scale

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Speaker 1: counts also, and here's a major clue, as the consumers

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Speaker 1: people told us yesterday, it's a lost leader for them.

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Speaker 1: In other words, they're losing money on every pack they sell.

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Speaker 1: Why because it gets you in the store to buy

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Speaker 1: other stuff. Remember also, at Costco, you've already paid a

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Speaker 1: membership fee for goodness sake to be there in the

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Speaker 1: first place, So their butter isn't really ten dollars a kilo.

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Speaker 1: They're eating the difference. As Trump would say in the

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Speaker 1: Hope you Buy Stuff in Il eight, Lots of supermarkets

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Speaker 1: run lost leaders as well all the time. They also

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Speaker 1: put chocolate biscuits at eye line to tempt you. It's

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Speaker 1: a very clever business. But Costco and their butter is

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Speaker 1: not a real economic equation, and there is no magic

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Speaker 1: in their pricing, the way Nicola seems to think there

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Speaker 1: is for more from the Mic Asking Breakfast. Listen live

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