MARKETING
The amount of sugar used in the United States in 1915 was 4,257,714 short tons. Of this, 3,389,175 tons were raw cane, the remainder consisting of 861,568 tons of domestic beet and 6,971 tons of foreign refined cane and beet. Of the 3,389,175 tons of raw cane, 150,000 tons were consumed in the raw state, and from the remainder, 3,239,175 tons, about 3,044,825 tons of refined sugar were produced. The per capita consumption was 83.83 pounds, and was made up of:
Among articles of food that contain a large percentage of sugar are jams, jellies, chocolate, canned fruits, condensed milk, confectionery, chewing gum and cordials. It is estimated by Willett & Gray that in 1915 the direct per capita consumption was 31.43 pounds, and that the remaining 52.40 pounds were used in various prepared or manufactured foodstuffs. Over ninety-nine per cent of all the cane sugar consumed in the United States is refined in New York, Boston, Philadelphia, New Orleans and San Francisco. The beet comes chiefly from California, Colorado, Michigan, Utah and Idaho; the maple from the New England states, Ohio and Canada; and the small amount of full duty-paying foreign cane from Java, Peru, Mexico, Central America and Santo Domingo.
During the past eleven years the consumption in the United States has grown at an average rate of 3.57 per cent per annum. In 1911, on account of the abnormally high prices, the increase was practically nil.
The annual per capita consumption of sugar in some of the other countries of the world is as follows:
The sale and distribution of large quantities of refined sugar is a serious problem and just as important as the production and the refining of the raw product. Competition is so keen, and the questions involved so complex, that the sale of the product really results in commercial warfare.
To dispose of the output of a large plant successfully requiresgreat intelligence, a broad grasp of business principles, strict honor and integrity, and prompt, decisive action in times of fluctuating markets.
Sales managers of the sugar-refining companies of the United States command high salaries, for the success of the business depends to no small extent upon their ability and judgment. Their knowledge of human nature must be broad and sound and it is tested to the utmost in their selection of assistants and brokers, for representatives always reflect the ideals, principles and methods of the parent authority.
The selling of sugar by the refiner direct to the consumer has not been found practicable, as an organization complete enough to keep in touch with consumers in every city, town and village of the country would be so top-heavy and costly to maintain that the price of the commodity to the consumer would be needlessly increased.
As matters stand, people living in the frozen valleys of Alaska, in the scarcely accessible regions of the Rocky mountains and in the lumber and mining settlements of the West, many miles from railroads, can obtain their supply of sugar with almost the same facility as the residents of New York or San Francisco. A system of distribution that makes this possible leaves little to be desired, and a word or two concerning it will be timely at this point.
Sugar is sold by the refiner to the wholesale grocer through the medium of the refinery’s broker. From the wholesaler it goes to the retailer, who in turn delivers it to the consumer.
Brokers are important factors in distribution. In every large city and consuming center, each refinery is represented by its own brokers, who keep in constant touch with all the wholesale grocers and manufacturers of their district.
A thorough knowledge of men and methods, sound business principles, diplomatic talents of no mean order and the capacityto act rapidly, but coolly, in business crises are found combined in the successful broker. He occupies a position between the seller and buyer, and it is just as much his prime duty to see that in all transactions full justice is accorded to both as it is to sell the sugar.
Every refinery having its own broker in each consuming center, it follows that the competition for business among the brokers is very keen. When a broker obtains an order from a jobber or manufacturer, he telegraphs it to his principal. The order is usually confirmed and the goods shipped promptly. For his services the broker receives three cents for every one hundred pounds of sugar sold. This compensates him for the services of his salesmen and himself, his office expenses and cost of telegrams, which is heavy.
Manufacturers of foodstuffs of which sugar is an ingredient, buy their supplies through brokers. They do not resell the sugar as such, but use it only in the manufacture of their own special products.
Wholesale grocery jobbers, of whom there are about twenty-five hundred in the United States, are also very important factors in the distribution of sugar. As a rule, they are located in the large centers of population, and have efficient organizations for the purchase and resale of all kinds of foodstuffs. They deal in as many as three thousand different commodities, and their expense of doing business is apportioned over all of these items, thus reducing to a minimum the expense of handling any one of them. Generally speaking, they have large establishments where stocks of all kinds of goods are carried ready for immediate distribution. The aggregate capital tied up in these stocks throughout the country is enormous, but necessary, as the jobber must at all times be ready to deliver to the retailer whatever is wanted in any of his lines. Wholesale jobbers occupy a unique position in the scheme of things. Theyare to the commerce of the country what the bankers are to its finances. In other words, they are the bankers of commodities. Their operating staff consists, first, of the buyers, and, second, of the salesmen.
The buyers are men possessing special knowledge concerning the various articles handled by the house. For instance, in the grocery line one will buy nothing but teas and coffees, another canned goods, another sugar, and so on. These men as a rule have devoted years of study to the particular commodity which they are delegated to buy. They are shrewd, keenly alert and always ready to take advantage of market fluctuations in their favor. The margin of profit between the buying and selling price of any commodity is usually so small that the acumen of the buyer is an important factor in the final results.
The salesmen are trained, tactful, tireless and efficient. They travel from town to town and place to place, visiting every nook and corner where human beings congregate, in order to sell the goods carried by the firm. While his calling is a most useful one, the life of a “knight of the grip” is not always pleasant, as he meets with many deprivations and discomforts.
To compensate him for capital invested, for the expense of doing business and for the losses he incurs in bad debts and declining markets, the jobber probably obtains a gross return of fifteen cents on each one hundred pounds of sugar he sells.
The next important link in the chain is the retailer. It is roughly estimated that there are three hundred thousand retail grocers in the United States, many of whom handle and distribute almost as many articles as the jobber. Their lot on the whole is not cast in pleasant places, because of the severe competition they meet in selling their goods.
Competition is a word regarded almost with affection by the buyer, but for the seller of goods it is probably the most unpleasant one in the English language. There is an old axiomwhich reads: “Competition is the life of trade.” It may be so, but the expression was no doubt coined by a buyer.
Among sellers, competition is in direct proportion to the number engaged in any particular business. It therefore follows that as there are three hundred thousand retailers in the United States, and hundreds in each of all the large cities, the struggle to keep on their feet and continue their various enterprises must be severe. The number of failures occurring every year amply substantiates this assertion. Reckless and unscrupulous men engage in every business, and the competition thus forced on all others in their line is not only unfair, but positively dishonest. Any individual can break a price or introduce new and expensive experiments in selling terms, which must be followed with equally attractive terms by the other sellers, thus resulting in great loss to all. It is no satisfaction that such men finally fail and go out of business, for the losses sustained in the interim can never be recovered.
Another grave difficulty with which the retailer has to contend is the fact that the average individual to whom he delivers his wares is apt to be rather callous when pay-day comes around. It is sad, but true, that those best able to pay are sometimes the most unsatisfactory customers of the retail grocer.
A retailer’s expense of doing business is proportionately much greater than that of the wholesaler, and his losses, due to bad or uncollectible accounts, are much heavier. The cost of delivering goods to the consumer’s door is high, and a fact that should be remembered, but which is frequently overlooked, is that it costs the grocer just as much to deliver a five-pound package of sugar as a wagon-load. Householders are proverbially careless, and telephone calls for late and urgent deliveries are a source of great annoyance and expense.
To create a pleasing impression, the grocer must keep a clean, sanitary store, and the expense incident to attractivewindow and shelf displays to invite attention is an important item. Department and other stores in his town or neighborhood often advertise “leaders” to attract the buying public, in the hope of selling with these leaders other goods at a profit, or because they are overstocked with a particular commodity. Every retailer must, as a rule, meet this unfair competition or lose his trade.
Sugar more than any other staple article is used as a leader, and, as a result, the retail grocer’s profit on it is very small. What remains to him out of the selling price of one hundred pounds of sugar does not exceed thirty-five cents, and more than likely it has cost him twenty-five cents to sell it. It is the retail grocer’s employé who delivers sugar in the quantity desired to the housewife at her door, and through her hands the pure, glistening crystals reach the family table.