Why Coca-Cola Is Planning To Keep Raising Its Prices
Coca-Cola has long been a leading brand in the soda category, but that doesn't mean the company is immune to the effects of a recession. With commodity price inflation hiking higher than previously expected, Food Business News reports that Coca-Cola is going into the next sales quarter of 2022 prepared for the economy to take a turn for the worst. Unfortunately for consumers, that means higher overall prices on their favorite Coke products.
Coca-Cola prices have already risen by 12%, Bloomberg shares, but due to the current state of the economy, strong sales and continued revenue growth will only be possible if Coca-Cola increases those prices even more.
As CEO James Robert B. Quincy explained in a July 26 earnings call (via Food Business News), this secondary price increase is necessary not only because of food inflation, but also because Coca-Cola also has to make up for rising employee wages and operational expenses such as transportation and media.
Prices are getting higher but Coca-Cola is getting better
During a recession, consumer habits change, and companies have no choice to but adapt. That ultimately means more pressure for name brands like Coca-Cola, Food Business News explains. People want to save money in every shopping category they can, often leading them to opt for cheaper priced items rather than name brand ones.
To drive revenue despite being the highest-priced soda on the shelf, Coca-Cola is working to increase its brand value. Per Marketing Dive, that translates to strategic marketing, including creating Coke Summer Music Events and Global Magic Weekends campaign, and adding new, unique products such as Fanta Dragon Fruit Zero Sugar, Minute Maid Aguas Frescas, and Coke Starlight.
"Our philosophy is to earn the right to price — to make the pricing of our products and our brands palatable to the consumers and to the retailers," Coca-Cola's CEO shared in an interview with CNBC. So while Coca-Cola prices will be going up, the company is doing everything it can to ensure its products are worth those prices.