Coca-Cola and PepsiCo expect sharp price increases

The world’s two largest soft drink producers are warning of significantly higher prices: both Coca-Cola and PepsiCo are witnessing considerable cost increases and, as a result, greater pressure on margins.

“Double-digit inflation”

Both multinationals published their company results on Thursday and stated their expectations for the current financial year. Those predictions are highly uncertain: the costs of aluminium cans, shipping and labour are rising sharply, which leaves producers to say they have no choice but to increase prices.

PepsiCo CFO Hugh Johnston told Reuters that the company might raise prices later in the year if costs rise more than expected, and he also did not rule out product shortages. In addition, there could be temporary shortages for some products as the supply chain is still disrupted. He expects “double-digit inflation”. PepsiCo recorded 12 % revenue growth in the fourth quarter, but net profit was slightly lower due to higher costs.

Rival Coca-Cola is also cautious: “Is it likely to be perfect this year? No, but we are doing the maximum we can to optimize our full availability”, CEO James Quincey said. His company saw sales rise 17 % last year, with profits up by a quarter compared to 2020 as price increases in the fourth quarter boosted net profit. The manufacturer expects sales to grow by 7 to 8 % this year and expects further inflation.