Coca-Cola increases prices to balance higher commodity costs

On Monday, the Coca-Cola Company said it would increase beverage prices to offset higher commodity costs. They made the decision since higher costs are much likely to bring pressure on profits in 2022. However, the Coca-Cola CEO did not specify which products would receive higher price tags.

When the pandemic broke out, both Coca-Cola and rival, Pepsi moved production to larger bulk packaging. It was for people who spent more time at home and stored in grocery stores. Before the pandemic, Coca-Cola had been promoting smaller cans and bottles with higher prices per ounce. Pepsi said last week that as the effects of the pandemic ease, smaller packages might reappear. Probably, Coca-Cola will make similar decision.

They are not the only consumer product manufacturers warning of price increases. Kimberly-Clark, the Huggies diapers and Scott paper products maker, said it plans to increase prices too. Their prices will increase for the entire North American consumer products business to help cope with rising raw material costs. Cheerios producer General Mills also said that prices would increase to offset higher freight and manufacturing costs.

Coca-Cola stocks increase

Overall, the demand on Coca-Cola increased and it reflected on the stock market too. The company’s stock price closed up less than 1% on Monday to $54.00.

The beverage giant reported net income of $2.25 billion in the first quarter, or 52 cents per share, down from $2.78 billion in the same period last year, or 64 cents per share.

Excluding special items, Coca-Cola earned 55 cents per share, higher than 50 cents per share.

Net sales increased by 5% to 9.02 billion U.S. dollars, exceeding expectations of 8.6 billion U.S. dollars. Organic revenue increased by 6%, while the number of unit cases remained the same as last year.

According to Coca-Cola Co., demand has improved every quarter and every month, especially on Chinese Market.

The company’s gleaming soft drink market (including sodas of the same name) saw sales growth of 4% this quarter. Increasing demand in China and India also helped their nutrition, juice, dairy and plant-based beverage sectors. This sector saw a 3% increase in sales.

Coke’s moisturizing, sports, coffee, and tea sectors were the most brutal hit and its sales fell by 11%. Demand for Coca-Cola tea products dropped by 6%, while sales of sports drinks such as Powerade fell by only 1%.

Coca-Cola also announced plans for the public listing of Coca-Cola’s African beverages. The company will sell part of its shares in the initial public offering, which will sell within 18 months. The company will list its shares in Amsterdam and Johannesburg.