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

Beverage Giants Plan July Price Hikes

Emily Jed
vending, vending machine, vending machine business, Coca-Cola Co., Coke price increase, Pepsi price increase, soda prices, Coca-Cola Refreshments, Coca-Cola Consolidated, beverage trends

ATLANTA -- Coca-Cola 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 and confirmed by a Coke spokesman on July 24, will vary across different sizes and brands.

Charlotte, NC-based Coca-Cola Consolidated 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, 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.

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