Coke, Pepsi hike prices, add new pack sizes

 NEW DELHI: With summer beginning to set in, beverage makers are sparing no time or effort to maximize sales. Cola majors PepsiCo and Coca-Cola are resorting to a slew of measures from hiking price to introduction of non-standard pack sizes to escape the margin pinch.

While Coca-Cola has raised prices of some of its products in the range of around 3% to 7% in the last one month, PepsiCo - the maker of
Mountain Dew, Nimbooz, Slice - had taken price hikes in a similar range almost three months ago, retailers said.

"Our pricing strategy is driven by a variety of factors such as input costs, inflation, consumer needs and other market dynamics. A few of the packs across select product lines have undergone a price change due to a combination of the above mentioned factors," a
PepsiCo India spokesperson said.

Besides price increase, trade insiders said both companies have been flirting with pack sizes to cater to different consumer segments. For instance, Coca-Cola has introduced non-standard pack sizes at more attractive prices for its products Limca, Fanta, Sprite and Thums Up to protect margins, a source said. "There are some pack sizes that are being sold only to kirana stores and not modern retail outlets like
Big Bazaar so that sales of both the pack sizes go up among different consumer segments."

Trade insiders said Coca-Cola has even doubled incentives for its fruit-based drink Maaza for its distributors to ensure bulk purchase of the product. According to experts, the move is intended to increase visibility of the brand, as this will reduce options to stock similar products from rival brands. "The company has doubled the discount it used to offer on Maaza in the last two months...it clearly wants to reinforce its dominance in the category," a source said. An email sent to Coca-Cola elicited no response.

For its diet Coke cans, where the company enjoys a strong foothold, Coca-Cola has even segregated the distributorship from the rest of the products, according to a person with direct knowledge of the matter. "Prices of diet Coke cans have gone up by nearly 13% from Rs 22 to Rs 25 over the last six months. Naturally the company wants distributors to give greater focus on the product so that sales are better," he added.

Experts said an increase in price from
FMCG companies, especially beverage makers, was expected given that rate of inflation for all commodities is rallying high. "Beverage companies work on very low margins so they have no choice but to pass it on to the consumer. But, the consumer is a bit conservative in spending currently especially when it comes to discretionary spending. Consumption has dropped significantly from until a few years ago," said Saloni Nangia, President, Technopak.