Coke Joins Other Consumer Brands in Raising Prices to Offset Higher Costs
If you’re one of those folks who need a mid-afternoon Coke to get the creative juices flowing again, your habit might soon get a little more expensive. On Monday, Coca-Cola said it will raise prices on its drinks to offset higher commodity costs.
In an interview with CNBC, Coca-Cola CEO James Quincey said price increases are needed to offset higher costs that are expected to bring margin pressure beginning in 2022. He did not specify which products would get higher price tags.
The iconic beverage company spent much of the COVID-19 pandemic focusing on larger bulk packaging for home-bound consumers who stocked up at grocery stores, CNBC reported. That represented a shift from Coca-Cola’s pre-pandemic strategy, when it and rival PepsiCo focused on smaller cans and bottles that tend to carry higher prices per ounce. Last week, Pepsi said smaller packaging will likely return as the pandemic impact eases.
They aren’t the only consumer-product manufacturers to warn of price hikes. J.M. Smucker has done the same. And as The Wall Street Journal reported last month, Kimberly-Clark, maker of Huggies diapers and Scott paper products, said it plans to raise prices across much of its North America consumer-products business to help counter rising raw-material costs. Cheerios maker General Mills also said it will raise prices to help offset higher freight and manufacturing costs in addition to rising commodity prices.
In related news Monday, Forbes reported that the monthly producer price index issued by the Bureau of Labor Statistics shows prices rising increasing at multiyear highs. The index for processed goods increased 4% in March — the biggest gain since August 1974. For the 12-month period, unprocessed goods climbed nearly 42%, which was the biggest increase since July 2008. Lumber, corn and copper are among the commodities that have seen recent price spikes.
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