A short video on product cartels

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Swiss Cheese Cartel Transcript:

Everyone likes things, but things cost money, thankfully under normal trade money can be exchanged for goods and services, but what happens when one person or group controls all of the supply of a certain thing? That’s when you get a cartel, no not that type of cartel but similar, in economics a cartel is an organisation between a group of producers to limit supply and artificially drive prices up. These so called product cartels are actually a lot more common than you think because its surprisingly easy to just make some backdoor deals with other industry giants to make a lot of money. And that’s what todays video is going to be all about, we are going to be looking at some of these shady organisations and dealings that led to product cartels like the Swiss cheese cartel. The swiss cheese cartel formally known as the swiss cheese union basically ruled the whole of the swiss cheese industry for about 100 years, yes that’s right this alphorn blowing little child used to control an industry that at one point used to cost the swiss government more than its entire military. But lets start at the beginning, its 1914, WW1 is going to break out and Europe is going to be completely destroyed, but thankfully due to switzerlands neutral position (make cheese not war) the price of cheese was pretty stable even though exports did slightly decrease. And Even though things could have been a lot worse, they could have also been a lot better thought the swiss cheese manufacturers who decided to create the swiss cheese union in 1914 to collude with other manufacturers and create strict noncompete laws, they also told dairy farmers exactly how much milk to produce and who to sell it to and told cheesemakers exactly how much cheese to make aswell as how much to sell it for. The Union basically controlled the entire cheese industry from cow to milk to cheese to store. Now, originally there were around 1000 plus different kinds of cheeses that used to be produced, which if you are trying to control an entire industry is a lot of paperwork and because there was no Microsoft excel this would lead to a lot of delays and mistakes which is, not gouda for business hehe. So they reduced the amount of cheeses produced to only just a few, mostly just gruyere and Emmental (emontal) which obviously meant that instead of a small amount of a lot of varied cheeses you had mountains of just a few cheeses, which presented its own problems. Namely getting rid of all of this cheese. But thankfully the Swiss cheese union had a solution for that too, fraud. I feel like fraud sometimes gets a bad rep, its always been there for me when I needed it the most and… I mean we completely disavow fraudulent activities on the stoic stick channel and comply with all necessary laws and guidelines. (sigh) okay anyway cheese fraud. The union had to basically hold up the entire dairy market by buying dairy with money that they got from government subsidies. These purchases artificially kept up the prices of milk and cheese which meant that dairy farmers and cheesemakers had guaranteed income, securing income of their primary producers, which is actually a pretty smart thing to do. This did however mean that, sweet mother of pearl that’s a lot of cheese. That there was a little bit of a backlog of cheese. The swiss cheese union needed to get rid of all this cheese and the only way they could do that was by encouraging people to eat more cheese, how did they go about doing this? By Make tastier cheeses? Decreasing prices? No don’t be silly, mass propaganda and marketing tricks to make people associate fondue a cheese dish that heavily used gruyere cheese, as the national dish of Switzerland. And, it worked, in the 1930s they ramped up the fondue psyop to the masses and like usual they lapped it up (subscribe now) so much so that the dish was now associated with national pride becoming one of the national dishes of Switzerland. So snow is blowing cheese is flowing and profits were growing. Life is great, well not if you are a cheese rebel that is. That’s right there were cheese rebels, who sought to oppose the monopoly and monoculture of cheese production that the cartels had created. Most famous of which was a man called Sepp Barmettler, an apt name for a man who was going to meddle with the big cheese. He wanted to add another variety of cheese production into the mainstream and spent 8 years sending applications and pestering the union to accept his newer softer Sbrinz cheese. They of course denied his applications replying to him in a letter that said “ you do not fit into the envisaged structures.” Which has no reason to go as hard as it does, but best believe I will be using this in as many scenarios as I can.