Dileep Kumar
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Coca-Cola returned to double-digit growth in the April-June quarter after four straight quarters of singledigit expansion. PepsiCo did not declare India-specific numbers.
NEW DELHI: The Finance Minister's decision to levy an additional excise duty of 5% on aerated sugary drinks has set off a tug-of-war between cola companies and their bottlers over how much of the burden should be passed on to consumers. Coca-Cola and PepsiCo want to minimise the price hike across packs as they believe this could negatively affect volume growth amid slowing sales.
Their bottling partners say prices should be raised in line with the excise hike announced in the Budget.
"We want to hike prices by 5% across packs as this is hurting our profitability. But the company wants us to absorb as much of the excise hike as we can, because hiking prices could negatively impact volume growth," said a leading bottler of one of the firms, requesting anonymity.
A PepsiCo spokesman said that prices are being increased, though he did not mention by how much and when. "We are taking price increase in PET bottles. No increase is contemplated at this stage on glass bottles, our entry-level package," he said in response to an e-mail query.
While some bottlers have increased prices marginally, others are still in talks with the companies. Both Pepsi-Co and Coca-Cola work with independent bottlers, which constitute about half of their bottling capacities.
In developed markets such as the US and France, governments have imposed soda taxes in an attempt to curb consumption of colas, which allegedly contributes to obesity. In India, the per capita consumption of colas is among the lowest in the world. Coca-Cola India's per capita consumption, for example, is 14 bottles a year, against the global average of 94. Speaking on behalf of Coca-Cola, PepsiCo and Parle Products soon after the Budget announcement, Arvind Varma, secretary general of the Indian Beverage Association, had called the excise hike 'retrograde'.
The additional 5% duty would lead to a cascading rise in levies, which would hit the industry hard and lead to a huge slowdown at a time when demand is already sluggish, he had said.
Coca-Cola returned to double-digit growth in the April-June quarter after four straight quarters of singledigit expansion. PepsiCo did not declare India-specific numbers.
Prices of 1.5-litre and 2-litre PET bottles of brands such as Coke, Pepsi, Sprite and Mountain Dew, sold on average at Rs 55 and Rs 75, respectively, are expected to go by Rs 2-5 each. The companies don't intend to increase prices of 200-ml and 300-ml bottles, which are mainly targeted at price-conscious rural consumers. Bottlers may force Coca-Cola, PepsiCo to increase prices to make up for shrinking margins - The Economic Times on Mobile
NEW DELHI: The Finance Minister's decision to levy an additional excise duty of 5% on aerated sugary drinks has set off a tug-of-war between cola companies and their bottlers over how much of the burden should be passed on to consumers. Coca-Cola and PepsiCo want to minimise the price hike across packs as they believe this could negatively affect volume growth amid slowing sales.
Their bottling partners say prices should be raised in line with the excise hike announced in the Budget.
"We want to hike prices by 5% across packs as this is hurting our profitability. But the company wants us to absorb as much of the excise hike as we can, because hiking prices could negatively impact volume growth," said a leading bottler of one of the firms, requesting anonymity.
A PepsiCo spokesman said that prices are being increased, though he did not mention by how much and when. "We are taking price increase in PET bottles. No increase is contemplated at this stage on glass bottles, our entry-level package," he said in response to an e-mail query.
While some bottlers have increased prices marginally, others are still in talks with the companies. Both Pepsi-Co and Coca-Cola work with independent bottlers, which constitute about half of their bottling capacities.
In developed markets such as the US and France, governments have imposed soda taxes in an attempt to curb consumption of colas, which allegedly contributes to obesity. In India, the per capita consumption of colas is among the lowest in the world. Coca-Cola India's per capita consumption, for example, is 14 bottles a year, against the global average of 94. Speaking on behalf of Coca-Cola, PepsiCo and Parle Products soon after the Budget announcement, Arvind Varma, secretary general of the Indian Beverage Association, had called the excise hike 'retrograde'.
The additional 5% duty would lead to a cascading rise in levies, which would hit the industry hard and lead to a huge slowdown at a time when demand is already sluggish, he had said.
Coca-Cola returned to double-digit growth in the April-June quarter after four straight quarters of singledigit expansion. PepsiCo did not declare India-specific numbers.
Prices of 1.5-litre and 2-litre PET bottles of brands such as Coke, Pepsi, Sprite and Mountain Dew, sold on average at Rs 55 and Rs 75, respectively, are expected to go by Rs 2-5 each. The companies don't intend to increase prices of 200-ml and 300-ml bottles, which are mainly targeted at price-conscious rural consumers. Bottlers may force Coca-Cola, PepsiCo to increase prices to make up for shrinking margins - The Economic Times on Mobile
