After bidding farewell to the era of 3 yuan, Coca Cola may continue to raise its prices.
According to the Beijing Business Daily, Coca Cola products in Hebei, Henan, Shandong and other regions have recently started to increase in price. Among them, 888ml cola, Sprite, and Fanta have been adjusted to 5 yuan, and 2-liter PET bottle products have been adjusted to 7 yuan.
As of now, Coca Cola China has not responded to this news. Interface News learned from some dealers in the aforementioned regions that there is indeed a price adjustment in this round. Among them, 8 bottles of 2-liter cola have a purchase price of approximately 44-45 yuan per box after the latest price adjustment.
A dealer stated that he has received a price increase notice, and the full box purchase price for goods prior to this was 41-42 yuan. Based on this estimate, the price increase for a full box of 2-liter cola is about 3-4 yuan, and the price for a single bottle may increase by about 50 cents. The price of a single bottle of 888ml cola, Sprite, and Fanta was about 3.5 yuan before, but this round has also increased along with it.
However, the dealer also stated that there are no mandatory requirements for terminal retail prices in this round of price adjustments. The customer service representative of Coca Cola's official mini program told the financial industry, "The suggested retail price for Coca Cola is 3.5 yuan per bottle, but the pricing varies from place to place for different merchants, and it is impossible for merchants to determine their own pricing."
This is the second time this year that Coca Cola has been rumored to raise its price.
In April, several price increase letters for Coca Cola's beverage products were circulating on the internet, affecting most of its products. Among them, a notification letter issued by Hubei Taikoo Coca Cola Beverage Co., Ltd. shows that starting from April 20, 2024, the company will adjust the suggested retail prices of some products. The suggested retail prices for 300ml soda are 2.5 yuan, 500/600ml soda is 3.5 yuan, 888ml soda, 450ml juice, queer and fruit milk are 4.5 yuan, and 1.8L juice is 11 yuan.
Another notification letter issued by Zhengzhou Taikoo Coca Cola Beverage Co., Ltd. stated that "with the adjustment of supply prices, the recommended selling price for 500ml cola/Sprite/Fanta/eye-catching/zero degree/zero calorie will be adjusted to 3.5 yuan on April 19, 2024.". The above news has not been responded to or confirmed by Coca Cola.
Based on media reports in the past two years, Coca Cola has been rumored to have raised prices in multiple rounds. In May of last year, multiple media outlets reported that Coca Cola had raised prices to varying degrees across multiple terminals across the country. Relevant media reports mentioned a price increase of 2.9% -11.4%, which is known as another price increase since entering the "3.5 yuan era" in 2022.
Based on industry trends, the price increase is mainly due to the rising costs of raw materials, supply chain, packaging materials, and labor in beverage production.
According to a research report by Haitong Securities, the manufacturing and labor of raw materials, white sugar, fruit juice, and other raw materials account for 20%, 15%, 10%, and 15% of the costs in the soft drink industry, respectively. Since the second half of 2023, the prices of bulk commodities have continued to rise, especially white sugar, which accounts for a high proportion of raw material costs in the beverage industry, with prices reaching new highs.
In this context, several brands in the beverage industry have been rumored to have raised prices in the past two years.
Previously, from April 2022 to this year, there were also three PepsiCo price adjustment notification letters circulating. The latest one stated that starting from May, "due to the continuous increase in costs, in order to maintain the normal operation of the company and comply with market rules, product supply prices will be adjusted accordingly, with a price increase of 1-2 yuan per original box.". Kangshifu's 1-liter pack of iced black tea was also reported by the media in April to have seen multiple terminal prices rise to over 4 yuan.
And Coca Cola's cost pressure is not only in the Chinese market.
In July 2023, according to the Financial Times, John Murphy, President and Chief Financial Officer of Coca Cola, announced during a earnings conference call that in the context of strong demand resilience, the company planned to continue raising product prices in the second half of the year based on global inflation rates. In May of this year, Coca Cola Japan announced that it would raise the prices of a large number of its products, including various models of cola in plastic bottles and cans, with a maximum increase of nearly 20%.
For fast-moving consumer goods companies, balancing sales and prices is a continuous challenge.
In 2023, Coca Cola achieved a revenue of 45.754 billion US dollars, an increase of 6%; The operating profit was 11.311 billion US dollars, an increase of 4%. Global single box sales increased by 2%; The single box sales in the Asia Pacific market increased by 2%, mainly driven by growth in the Chinese and Indian markets. The sales of carbonated beverages increased by 2% both in the fourth quarter and throughout the year, mainly driven by growth in the Latin American and Asia Pacific markets.
Under the pressure of cost and intensified competition, the pressure of Coca Cola's price increase has shifted to the channel sector.
According to data from offline retail monitoring agencies for fast-moving consumer goods, Coca Cola's terminal sales prices were not significantly affected by last year's price increase rumors. From January to July 2023, although the prices of different specifications of products fluctuated, overall, the average price of each specification in Coca Cola's classic flavors decreased slightly. In the sugar free flavor, there has been a slight price increase in the small specification group products (220ml, 300ml, 330ml, 500ml), while the large specification products have shown a more significant price reduction.
It remains to be seen whether this round of price increases will significantly drive retail terminal prices, so consumers may not have a clear perception of price increases at the terminal.
Taking a 2-liter bottle of cola as an example, according to the interface news, the price of a 6-bottle full box of this specification product in Coca Cola's JD self operated flagship store is currently 39 yuan, equivalent to 6.5 yuan per bottle, and has not yet exceeded the 7 yuan mark.
Considering that the consumption of carbonated drinks is mainly concentrated in offline supermarkets and catering stores, as seen from the Meituan food delivery platform, multiple convenience stores and supermarkets in Handan and Zhengzhou sell 2-liter bottles of cola, with prices ranging from 5.9 yuan to 9 yuan, while 888ml cola is priced at 3.75 yuan to 5.5 yuan in Handan.
Overall, due to the uneven pricing and wide price range of individual businesses, consumers still have room for choice. According to the information provided by a dealer to Interface News, there are no mandatory requirements for terminal retail prices in this round of price adjustments. Merchants have a high degree of freedom, and some merchants may even sell at a loss if they engage in promotions.