Pepsi, Coke Raise Prices Ahead of July 4

6/29/2011 9:16:34 AM

Increases to Roll Out Across Packages, Brands to Combat Rising Commodity Costs

Consumers' favorite beverages are about to get a bit more expensive.

Heading into the July 4 holiday, both PepsiCo and Coca-Cola have said to expect price increases, as the companies try to offset higher commodity costs.

PepsiCo aims to raise prices of its soft drinks in the U.S. as the economy improves, CEO Indra Nooyi said. The company in April vowed to increase beverage prices from July 4 to offset higher commodity costs, with rival Coca-Cola also saying prices would increase 3% to 4% in the second half.

"The economy is better now than it was last year," Ms. Nooyi said in an interview on the sidelines of a consumer goods forum in Barcelona earlier this month. "Ultimately the test is going to be when unemployment rates come down. Everybody is focused on it."

Trade publication Beverage Digest reported that Coca-Cola's two biggest bottlers in the U.S. will be raising prices in the coming weeks, citing two retail customer pricing letters. One from Coca-Cola Refreshments stated that it will raise prices by 3% to 4% on July 31. Coke Consolidated says it will raise prices 3% to 5% in early July. In communicating with retail customers, both bottlers cited rising costs in ingredients, with Coke Consolidated saying that, in the last year, corn prices are up 110%, aluminum is up 24%, plastic is up 42% and crude oil is up 43%.

Coca-Cola Refreshments said that the "magnitude of this increase will vary across packages and brands."

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