Coca-Cola set to raise prices
Commodity and transport costs have become too much for Coca-Cola, which announced plans to up its prices soon to offset increased production costs. Sam Eaton reports.
Coca-Cola products in a cooler at a convenience store. (Justin Sullivan/Getty Images)
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Scott Jagow: Coca-Cola turned in its profit report yesterday. It was better than expected, but it still wasn't very good, so Coke is going to raise its prices.
Sam Eaton reports.
Sam Eaton: Higher commodity and bottling costs have eaten into Coca Cola's bottom line. The solution, at least for Coke's bottling company Coca-Cola Enterprises, is to pass those costs on to consumers.
But retail analyst Phil Lempert says the strategy may backfire.
Phil Lempert: When we look at the soda business, we're seeing sales decline year after year for almost the past decade. So when you have price increases hitting, more consumers are going to be looking at that bottle of Coca-Cola and saying, "Do I really need this?"
Especially with the recent run-up in food costs, Lempert says consumers are foregoing soda pop for more essential items like milk and bread and if they do splurge on bottled drinks, they're more likely to buy generic store brands at a lower cost.
Lempert says instead of raising prices, Coke should innovate, and the first place to start, he says, is by speeding the launch of drinks sweetened with Stevia, the first all-natural zero calorie sweetener.
In Los Angeles, I'm Sam Eaton for Marketplace.
Comments
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From Atlanta, GA, 11/15/2008
Since they increased prices, I started buying the generic drinks, and will continue to do so. And since the price of gasoline has gone down, why haven't the drink prices? They DID use the price of gasoline as an excuse, didn't they? Yep, they used it as an excuse to raise prices, but there's no way they'll lower them! UNLESS everyone refuses to buy them, and then they'll have no choice. I'm sick and tired of greedy corporations trying to fleece the public. I'll drink tap water before I buy another coca-cola at such ridiculous prices!
From ND, 10/31/2008
Personally I'm getting tired of the "cost of transportation" being the excuse for the increase in the price of anything. For example, how many cans and bottles of pop leave the manufacturer and reach retail stores every day. The bottles of pop in the vending machines went from $1.25 to $1.50 because of "the cost of transportation." The price of oil and gas has dropped and now the prices are still $1.50. You have gone to flimsier plastic for the bottles and the cans of pop are a cheaper aluminum and are not 12 ounces of product. There are cans of pop that are barely making 9 to 10 ounces in a glass and of course you have to allow for the "weight" of the can. Now as for the price, well you can guess on that. Why should the price of pop go down just because the cause of it, gas and oil, have gone down. Each individual can and bottle has gone up in price, and will stay up in price. Now take that increase in your product and apply it to each INDIVIDUAL item and then take a look at the money you received from the consumer and what the actual cost of the transportation was. That extra $600 to $800 that it took the semi driver to fill his truck to deliver that product has been covered and then some. Now how much did you say you spent in transportation versus what you charged for your product all because of the price of gas and oil? Didn't we pay a higher price in gas and oil just to pick up your product? Is passing the buck easier than to dip into your profits. I know I've cut back in drinking Diet Coke and Coke. I haven't bought a case of any Coke product over the last month and a half. It's cheaper to drink coffee and water, not to mention healthier for a person.
From MA, 09/19/2008
I am seeing no sales at the .99 price point anymore for coke products and they have raised the 12 packs from sale proce point of 2.00 to 3.33 on sales. Well guess what I will drink water and save the money they will see further decrease in sales I dont see how they justify that large an increase. Just like when they brought out New Coke. I hope it backfires in their face.
From Stoughton, WI, 09/11/2008
I hate to see the price of Coke rise as it was in the day of Soft Twist Bread to the grocery store brand - So it will be to my favorite soft drink. It would make more sense to me to at least have 2 liter bottles (family size) regularly stay at or near 1.00 most anywhere it is sold than to pay so much for that single bottle (about 1.39 for the 2 liter) Then have sales all over the map on the other sizes carton sizes 6-packs, 8-packs 12 packs and 24 packs - it will cost more to produce those but that single 2 liter when compared to store brands 69 cents or 79 cents - so its obvious it can be produced for less than the mark upped difference from their brand to the Coke brand
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