This is Why Coca Cola is Going to be Raising its Prices

For those who love drinking Coca Cola, get ready to see your favorite beverage get a price bump.

The company’s CEO has said recently that they will raise prices to offset higher commodity costs, following in the footsteps of consumer giants Kimberly-Clark and J.M. Smucker.

Chief Executive James Quincey said on Monday to CNBC that Coca Cola is hedged against any major impact in 2021 but he expects to see higher commodity costs next year.

The price increases will help Coca Cola’s profit margins but consumers may still be struggling because of the economic impact of COVID-19.
“We are well-hedged in ’21, but there’s pressure built up for ’22, and so there will have to be some price increases,” Quincey told CNBC’s Sara Eisen on “Squawk on the Street.”

“We intend to manage those intelligently, thinking through the way we use package sizes and really optimize the price points for consumers,” he said.

During the pandemic, the company had shifted its production to focus on larger bulk packaging to appeal to consumers who were stock piling and spending more time at home.

The CEO did not say which products would receive the price increases. The last time the company boosted its products’ prices was in 2018, citing the impact of aluminum tariffs.

Coca Cola also posted its first-quarter results where both earnings and revenue topped Wall Street estimates.

The company said that the demand in March reached pre-pandemic levels. “We are encouraged by improvements in our business, especially in markets where vaccine availability is increasing and economies are opening up, and we remain confident in our full year guidance,” Quincey said in a statement.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.