From Luxury to the Cheapest Calorie

Goal: After this lesson you can explain how sugar went from a costly luxury to the cheapest sweetener, and what price elasticity means. Subject: Economics | Run time: about 7 minutes

Quick recall

Last time we covered resistance and revolution. Two quick questions. One: which revolution was the only successful large-scale slave revolt, and when did it happen? The Haitian Revolution, from 1791 to 1804 (Mintz, 1985). Two: in what year did Britain abolish the slave trade? In 1807 (Mintz, 1985).

Why this matters

In 1700, sugar was a luxury. A wealthy family locked it in a box like jewelry, because a pound cost about 45 dollars in today's money (U.S. Department of Agriculture, 2023). Today you can buy that same pound for about 2 dollars, and the average American eats about 130 pounds of it a year (U.S. Department of Agriculture, 2023). How does a treasure become the cheapest calorie on the shelf? That story is one of the clearest examples of an economic rule called price elasticity.

The idea

Let's track the two numbers, price and consumption, across time. In 1700, a pound of sugar cost roughly 45 dollars in modern money, and a person ate about 4 pounds a year (U.S. Department of Agriculture, 2023). By 1850 the price had fallen to about 18 dollars a pound, and consumption climbed to about 20 pounds. By 1950 it was down near 5 dollars a pound and up to about 80 pounds. By 2023 the price sat at about 2 dollars a pound, and consumption reached about 130 pounds a person (U.S. Department of Agriculture, 2023).

Put the start and the end side by side and you get the key ratio. The price dropped about 95 percent, and consumption rose about 3,150 percent (U.S. Department of Agriculture, 2023). That is the whole point. As sugar got cheaper, people did not eat a little more. They ate dramatically more.

That relationship has a name: price elasticity of demand. It measures how much the amount people buy changes when the price changes. When a small drop in price brings a large jump in buying, demand is elastic. Sugar is a textbook case. A 95 percent price cut and a 3,150 percent rise in eating tells you demand for sugar is highly elastic (U.S. Department of Agriculture, 2023). Cheap sugar does not just sit on the shelf. It pulls itself into more and more of the food supply.

All that eating adds up to a giant business. The global sugar market is worth about 185 to 220 billion dollars a year (Food and Agriculture Organization, 2024).

Now, here is the question that should bother you. Who got the money along the way? Look at how the value of sugar splits up. In the colonial era, the raw producer share, the share that went to the people actually growing and cutting the cane, was 0 percent, because that work was done by enslaved labor that was paid nothing (Mintz, 1985). In the modern market, the raw producer share is about 15 to 25 percent (Food and Agriculture Organization, 2024). That is real progress from zero, and it is still a minority slice of every dollar you spend.

Picture it

Picture two grocery receipts. The first is from 1700, and it shows one pound of sugar costing about 45 dollars, locked in a box like a jewel. The second is from today, and it shows the same pound for about 2 dollars, tossed in the cart without a thought. Between those two receipts, consumption per person went from about 4 pounds a year to about 130. The price fell off a cliff, and demand climbed a mountain. That gap is price elasticity, drawn in sugar.

Remember this

The fact to carry out: sugar's price fell about 95 percent while consumption rose about 3,150 percent, and that giant response to a falling price is what economists call elastic demand (U.S. Department of Agriculture, 2023). The luxury became the cheapest calorie, and the raw producer share crept up from 0 percent under slavery to about 15 to 25 percent today (Mintz, 1985; Food and Agriculture Organization, 2024).

Quick check

Quick check. What does it mean that sugar's demand is highly elastic? It means small price changes cause large changes in how much people buy, which is why a 95 percent price drop led to a 3,150 percent rise in consumption (U.S. Department of Agriculture, 2023).

Key Takeaways

In 1700 sugar cost about 45 dollars a pound in modern money at about 4 pounds eaten per person; by 2023 it was about 2 dollars a pound at about 130 pounds per person (U.S. Department of Agriculture, 2023).
The key ratio is about a 95 percent price drop matched by about a 3,150 percent rise in consumption (U.S. Department of Agriculture, 2023).
Price elasticity of demand measures how much buying changes when price changes; sugar's huge response makes its demand highly elastic (U.S. Department of Agriculture, 2023).
The global sugar market is worth about 185 to 220 billion dollars a year (Food and Agriculture Organization, 2024).
The raw producer share rose from 0 percent under enslaved labor to about 15 to 25 percent in the modern market (Mintz, 1985; Food and Agriculture Organization, 2024).

Sources

Food and Agriculture Organization. (2024). Sugar market review 2024. https://www.fao.org
Mintz, S. W. (1985). Sweetness and power: The place of sugar in modern history. Penguin Books.
U.S. Department of Agriculture. (2023). Sugar and sweeteners yearbook tables. https://www.ers.usda.gov