Coca-Cola is Raising Prices

The Lempert Report
February 20, 2023

On today’s Bullseye – Coca Cola has announced that it will raise prices again in 2023 – the reason? They have “earned the right to price with the consumers’ – through enhanced marketing and an agile packaging approach that balances premium and small entry level pack sizes for broader consumer appeal – according to the company. 1What does that even mean? CEO James Quincey on an investor call last week discussing the company’s 4th quarter earnings, explained that even though the inflationary environment appears to be cooling Coke is expected to see elevated inflation across its operating costs. He went on to say that ‘it’s not our strategy to think of our business as commoditized where prices flow up and down in a kind of mechanical way. We need to do our own pricing by delivering for the consumers value they appreciate through the marketing, innovation, revenue growth management, the pricing and packaging work, etc. He explained on the call that Coca-Cola has “earned the right” in part through increased marketing spend and creative campaigns that “link occasions and passion points to drive engagement”.

I don’t know about you, but I’m really not that passionate about any soft drink – certainly not one that keeps on increasing pricing. So let me get that right – rather than offering shoppers the same or discounted pricing – they are taking the money to spend in advertising? In Coke’s 4th quarter organic revenue grew 15%. They are forecasting revenue growth of 708% in 2023 primarily led by the price increases and mix of products.  primarily from price increases and RGM initiatives. Unit sales however declined 1%. Reference point: Quincey owns over 32,000 units of Coke stock worth over $20 million. His makes $18,701,100 as chairman of the board and CEO of Coca-Cola according to Wallmine. Now I understand just who has that passion!