According to just.drinks.com, PepsiCo and The Coca-Cola Company have confirmed that they will increase soft drink prices in the United Sates in the second half of the year. Earlier this week, PepsiCo told Beverage Digest that it plans to raise drink prices in the country by an average of 3% to 5% between mid-July and Labor Day. Likewise, in April, Coca-Cola informed investors on its first-quarter earnings call that it will raise prices 3% to 4% during the second half of the year, for a total increase of 2% to 3% for the full year.
Rising raw materials costs are a major concern for many soft drink companies in 2011, with both PepsiCo and Coca-Cola having warned of increases at a global level. Both companies plan to get the price boost from a mix of raising prices, fewer deals and shifting the mix of products sold to higher-priced items, as they look to offset the increasing costs of ingredients, said Beverage Digest.
CEO Muhtar Kent told analysts that the company will be looking at “every opportunity in North America to see if we can generate a higher price than the overall 1% to 2% and more like, maybe, 3% to 3% as we look into the balance of the year.” Kent said the company was confident that its brand strength would allow it to generate the higher price increases.
“We’re now saying that we’re going to probably be going for more pricing than that this year, and a lot of that is just strictly the environment that we’re in,” said Gary Fayard, CFO for Coca-Cola.
Earlier this month, Coca-Cola closed on of its distribution and sales centers in the United States as a result of “the pricing environment…and the high cost of commodities.”
