I have some first- and second-hand experience with this, and you are correct. I'm not sure who benefits from this practice. It's anywhere from 5-25x cheaper in even small-ish quantities.
But those costs will be passed onto whoever's buys their bulk products, who will then un turn pass the cost down to the end of the chain - consumers. It just makes everything cost more for end users still.
Someone told me that mid-rich people often group together to have a grocery accountant who will do their bulk shopping for them and it ends up costing them less than a supermarket prices for superior products.
While I agree with you, that it isn't cheaper in the end, people think short term. Lots of companies are trying to pinch pennies at every corner. A great example: Why does extra sauce cost more money? It pisses most people off and a lot of people turn it down. But they still probably see slightly higher margins at the end of the year.
Often same product with a different price sits on the same shelf in a supermarket. Some (most, in fact) people will buy a costlier version, because they can afford to pay more for (perceived) better quality.
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