Potato chips are a tasty side or snack that is sometimes difficult to stop eating.
However, upon seeing the price of chips, you may think twice about overindulging.
Considering that potato chips are nothing more than thin strips of potatoes, you may wonder what it is about them that makes them so expensive.
Why Are Potato Chips So Expensive? (10 Reasons)
Potato chips tend to cost $5 or more.
They used to be only a few dollars per bag.
Problems affecting potatoes, the size of the bag you buy, and the impact of certain factors affecting supply and demand have all increased the price of potato chips.
Let’s look at these reasons in more detail.
1. Bag Size
One factor influencing the price of potato chips is the bag size.
Like many other types of food, you tend to have standard, family, and party sizes.
Party size tends to be the largest because it’s intended for the largest number of people.
Family size is ideal for families to share.
Standard sizes are for a single person to enjoy.
The different sizes indicate how many chips are in each bag.
That said, all potato chip bags are going to have a lot of air in them.
The air serves two purposes.
The first is to protect the chips.
Since they’re delicate, any kind of rough handling will make them break into small pieces.
The air provides some padding to ensure they don’t break apart as easily.
The second reason is that the air helps keep the chips flavorful and from going stale.
If there wasn’t any air in the bag, then your chips might grow stale over time.
Despite having a lot of air in the bags, chip pricing is based on weight rather than volume.
Chip bags that have the most chips in them are going to weigh more than chip bags with fewer chips in them.
As such, bigger bags are more expensive than smaller bags.
2. Brand Name
The brand name also makes certain chips expensive.
When walking down the chip aisle, you’ll see several familiar names.
Doritos, Ruffles, Lay’s, and Fritos are just some of the big brand names.
You’ll also see other chips that look very similar to the branded chips.
They may have more generic names or simply be labeled “potato chips.”
Generic brands tend to be cheaper than brand names because you’re not paying for the brand.
You’re just paying for the potato chips.
When you buy anything that has a well-known brand name attached to it, then part of that cost is simply for the brand.
That’s because brands put a lot of effort and money into building a reputation for themselves.
They market themselves as having the tastiest chips, for example.
When you buy a brand of chips that markets themselves aggressively, then you expect them to have tasty chips.
If you find the chips tasty, then you believe that the brand is telling the truth.
Word spreads, and then the brand gets the reputation for having tasty chips.
Generic brands don’t do much marketing.
They rely on their low prices to grab buyers’ attention.
They often taste similar to the brand name.
The only difference is that the brand markets itself and the generic brand doesn’t as much.
People trust brand names.
They wouldn’t be as well known if they weren’t good.
Generic brands are a bit riskier because you don’t know about their flavor and quality.
Since brand-name potato chips are a safer choice, people tend to buy them over generic brands.
Brands know this and inflate their prices ever so slightly to capitalize on it.
Potato chips are expensive when you buy the brand-name version.
3. Potato Prices Increasing
Potato chips come from potatoes, so when potato prices start to increase, you can expect potato chips to also increase in price.
There are several reasons why potato prices are increasing.
Problems affecting agriculture are one of the major reasons.
Whether it’s drought, wildfires, or other problems with the environment or climate, farmers are having a difficult time growing potatoes.
Considering that potatoes are some of the hardiest vegetables to grow, that’s quite concerning.
Potatoes have a reputation for growing even in poor soil.
They can even last through droughts.
However, even potatoes have their limits.
They need some water to thrive.
They also don’t have much protection against wildfires.
If a forest fire passes through farmland, then those potatoes won’t make it.
Forest fires also impact how much sunlight potatoes are going to receive.
Potatoes, like other plants, require sunlight to live.
They get their energy through photosynthesis.
When the smoke from forest fires blocks out the sun, potatoes are no longer able to get the energy they need.
Without energy, they either die or don’t grow to their full potential.
Other factors also influence the price of potatoes, such as a lack of available workers to tend to the fields or supply problems.
This makes potato chips expensive because manufacturers need to buy potatoes to make their products.
Since they’re taking on higher costs by buying more expensive potatoes, they have to sell their potato chips at higher prices.
Should potato prices ever fall, then the price of potato chips will likely also decrease a bit.
4. Potato Shortages
Another major reason behind the increased price of potato chips is that there’s a shortage of potatoes.
While problems with the environment are certainly part of the reason behind the shortage, the fact that the bulk of the world’s potatoes come from Europe is also the reason.
The war going on in Europe’s breadbasket is affecting the production of potatoes.
No one can farm potatoes when missiles are falling from the sky and soldiers are fighting in their fields.
Because farmers aren’t able to work their fields, they’re not able to export potatoes.
With fewer potatoes on the market, it drives up the price of potatoes that are for sale.
Other countries have to pick up the slack.
However, not every farmer is ready to expand their fields.
Potatoes were notoriously cheap in the past.
They didn’t earn farmers that much money.
To make ends meet, some farmers turned to growing and selling cash crops instead.
With fewer farmers planting and growing potatoes, it means there’s even less supply than there was before.
Demand for potatoes has remained the same despite the shortages.
Since the supply is unable to meet demand, the price of potatoes is high.
With higher prices on potatoes, the price of potato chips is also high.
5. High Demand For Potatoes
The other side of expensive potato chips is the demand for them.
It isn’t just the potato chip industry that needs potatoes.
Fast-food restaurants rely on potatoes to make fries and other potato-related dishes.
Even expensive or mid-tier restaurants need potatoes to make fries.
Then, there are all the grocery stores that sell potatoes to consumers.
There’s a lot of demand for potatoes.
Demand hasn’t stopped either even with potato shortages occurring.
This means that people selling potato products like potato chip companies need to get their hands on potatoes.
That usually means these companies need to pay top dollar to get the potatoes.
Since there’s now a higher cost to get the raw materials needed to make their products, they have to sell their products at higher prices.
Competition with other businesses that need potatoes has made potato chip prices increase.
6. Expensive Fertilizer
Although you may not want to think about fertilizer when eating potato chips, the cost of fertilizer is also impacting the price of your potato chips.
The price of fertilizer has risen over the past few years.
There are several reasons behind it.
The chokehold of natural gas in Europe has made it so several European countries have had to limit ammonia production.
Worrying about gas availability to warm homes, European countries have had to ration how much gas their people use.
This also means that there has been less ammonia produced since ammonia comes from natural gas production.
Ammonia is a vital part of making nitrogen-rich fertilizer.
China also produces ammonia from harvesting coal.
However, they’ve been having problems with their ammonia supply as well.
As such, they’ve put a ban on exporting fertilizer to ensure they have enough for their own people.
The fertilizer that China does sell to the United States has sanctions regarding it.
This means that it becomes very expensive for China to sell fertilizer to the United States.
They have to pay extra taxes and fees to do business.
Those who buy the fertilizer from China end up covering those costs since China prices it higher to cover their expenses and make a profit.
The shortage of fertilizer has increased its price.
This makes potato chips expensive because farmers need fertilizer to grow their potatoes.
While potatoes will grow in the absence of fertilizer, they don’t grow as well.
That means farmers usually have fewer products to sell.
To get their hands on fertilizer, the farmers have to spend more money.
Since everyone is competing for the same low supply of fertilizer, it’s the farmers with the deepest pockets who are able to bring it home.
Since the farmer takes on more expenses to grow their potatoes, they have to sell them at higher prices.
The manufacturers of potato chips then take on more expenses since they’re buying the expensive potatoes.
That then trickles down to the customer who has to pay more for potato chips since the manufacturer increased the price to cover their expenses.
The price of fertilizer has increased the price of potato chips.
7. Markup Prices
Potato chip prices also depend on the particular retail store they’re being sold in, too.
Each retail store has different markup percentages that they use on products.
The markup price is how stores make their profit.
A store that sells a bunch of different potato chips will likely have cheaper prices on its potato chips.
That’s because there’s a lot of competition among the brands.
A store that only sells a few potato chip brands might have higher prices on them.
In this case, the competition isn’t as fierce.
Some stores that have a reputation for selling at high prices will likely have more expensive potato chips than stores with a reputation for selling at cheap prices.
Store locations can also impact markup prices.
If the store is near a sports arena or a theater, then they might have higher prices on snack items.
That’s because they know that a lot of people are probably going to come to the store to get snacks for the game or movie.
Stores that aren’t located near popular landmarks often have cheaper prices since their customers aren’t necessarily visiting them to buy snacks for a particular event.
While brand names and potato problems add to the price of potato chips, the store that’s selling the potato chips also factors into the expensive prices.
8. Special Ingredients
The simplest potato chip is a chip with some salt on it.
There are tons of different chip options that are much more involved than that.
You can find chips that are actually made out of bacon.
You can find chips infused with specialty flavors or ingredients.
Sometimes potato chip companies even partner with another company to offer a limited-edition flavor.
This makes potato chips expensive in a few ways.
The first is that the more ingredients that a potato chip uses, the more expensive it is to make.
Even if it only adds a few cents to the production line, those are cents that the manufacturer is going to want to more than make up for.
The rarer the ingredient is, the more expensive it is likely to source and use in the production of chips.
Finally, specialty chips that only have a limited run are expensive because they’re only around for a short time.
There are only so many of them made.
Demand is usually high because everyone wants to try the new or unique flavor.
With high demand and low supply, potato chip manufacturers can make their specialty chips expensive.
9. Supply Chain Problems
A major problem that’s causing potato chips to increase in price is supply chain issues.
Thanks to COVID-19, the supply chain for many products fell apart.
Factories closed, drivers quit, but demand for products continued.
Since people were stuck at home, many turned to snacks as comfort food.
When factories reopened, there was still a problem with the supply chain.
Farmers needed to find workers, carriers needed to find shipping containers, and transporters needed to find drivers for their trucks.
Whether it was problems at ports, an inability to hire enough workers, or just not having enough workers to take care of fields, problems compounded.
Because supply chains became so disrupted, it meant that potato chip companies weren’t able to produce as many bags as efficiently as they used to.
This has led to potato chip shortages in some areas.
There are only so many to go around until the supply chain gets sorted.
With high demand and a struggling supply, the price of potato chips has risen.
A final reason potato chips are expensive is because of inflation.
Inflation causes the price of everything to increase.
When the pricing of raw materials and tools used to make a product increase, then the final product’s price is also going to increase.
Whenever a manufacturer has to spend more money to make a product, they’re going to charge their customers more money for the product.
Inflation also means that buyers have a bit more buying power.
Some companies take advantage of that by having higher prices.
Since the buyers can afford it, the company wants to earn as much profit as possible on the sale.
Potato chips are expensive because of the influence of inflation.
Potato chips are usually a cheap snack that you can enjoy at home or on the go.
However, due to the reasons listed above, potato chips are no longer the inexpensive treat that they used to be.NEXT: Where Can The King Move In Chess? (Explained)