[vendtalk] FYI - Beverage Giants Plan July Price Hikes

[Vandervoort's]

Issue Date: Vol. 51, No. 7, July 2011, Posted On: 6/27/2011 


Beverage Giants Plan July Price Hikes



by Emily Jed;  <mailto:Emily at vendingtimes.net> Emily at vendingtimes.net 


	

ATLANTA -- Coca-Cola <http://www.coca-cola.com>  Co.'s two largest bottlers
plan to raise their prices starting next month to offset climbing commodity
costs. 

The 3% to 4% price increase, first reported by Beverage Digest
<http://www.beverage-digest.com>  and confirmed by a Coke spokesman on July
24, will vary across different sizes and brands. 

Charlotte, NC-based Coca-Cola Consolidated <http://www.cokeconsolidated.com>
sent a letter to its customers stating that it will raise prices 3% to 5% in
early July, according to Beverage Digest's report last week. Separately,
Coca-Cola Refreshments, a division of Coca-Cola Co., informed its retail
customers that it will hike prices by 3% to 4% on July 31. 

The bottlers said the skyrocketing costs of commodities like oil, aluminum
and corn needed to produce and their beverages and packages (and transport
them) necessitate the price hike. Beverage Digest predicted that most other
Coke bottlers will likely raise prices by similar amounts. 

Coca-Cola Refreshments and Coca-Cola Consolidated together sell about 84% of
Coca-Cola's bottle and can volume in the U.S. Separately, PepsiCo Inc. said
it is raising prices 3% and 5% between mid-July and Labor Day, according to
Marketwatch.com <http://www.marketwatch.com> , a financial information
website. 

Another move both beverage giants have taken is adding smaller package sizes
to their product repertoires. Industry observers view the trend as a subtle
way to charge more per ounce while at the same time reducing the sticker
price. 

One example is the mini can, which appeals to calorie-conscious consumers
and cost less than conventional single-serve containers. The company is also
complementing its existing bottle sizes with a new 1.25-liter package that
sells for 99¢, or 2.3¢ per fluid ounce. This compares with an average $1.32,
or 2¢ per ounce for a 2-liter container in supermarkets, according to
Beverage Digest. Coke has said adding the new size will allow it to raise
prices on 2-liter bottles. 

(In the vending machine channel, 12-fl.oz. cans and 20-fl.oz. bottles are
the most commonly used package sizes.) 

PepsiCo, likewise, reportedly plans to roll out a 99¢, 1.5-liter bottle (2¢
per fluid ounce) in supermarkets this summer that's priced almost the same
as its two-liter bottle. 

Consumer advocates say the soft drink industry is adding its latest round of
new package sizes the right way. They say consumers are unlikely to feel
"tricked" by paying more per ounce for the smaller size, since it's not easy
to mistake a mini-can for a standard 12-fl.oz. container, or a 1.25-liter
bottle for a two-liter bottle.