Coca Cola has announced plans to increase prices on its beverages to offset the effects of rising product costs.
The soda company enters the ranks of other consumer behemoths including Kimberly-Clark and J.M. Smucker. Smucker is raising their rates. While the switch will help their profit margins, it may come at the expense of cash-strapped customers who are still feeling the effects of the coronavirus pandemic’s economic impact.
On CNBC’s “Squawk on the Street,” CEO James Quincey said, “We are well-hedged in ’21, but there is pressure building up for ’22, and so there will have to be some price rises.”
We intend to manage those intelligently, thinking through the way we use package sizes and really optimize the price points for consumers,” he added.
Throughout the crisis, Coke focused its production on larger bulk packaging in order to cater to customers who were spending more time at home and stocking up at the supermarket.
Prior to the pandemic, however, Coke and its competitor PepsiCo have been promoting smaller cans and bottles, which have a higher price per ounce for the customer and are more lucrative for the producer.
Pepsi executives said on Thursday that as the crisis eases, they expect smaller packaging to return.
Quincey did not specify which Coke products would be more expensive. The business last reported a price rise in 2018, citing the effect of President Donald Trump’s administration’s aluminum tariffs.