Coca-Cola focuses on its “price ladder” amid high inflation | WARC | The Feed
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Coca-Cola focuses on its “price ladder” amid high inflation
With consumer wallets under pressure, The Coca-Cola Company is sharpening its focus on pricing, tiering, and pack size to demonstrate value for consumers in more difficult times, even as its prices have increased in some markets.
Why it matters
Coca-Cola is a bellwether consumer packaged good brand. As high inflation remains an issue globally, Coca-Cola’s pricing strategies can provide a blueprint for brands looking to follow its lead.
In a recent Q3 2022 earnings call, chief exec and chairman James Quincey said that the impact of inflation is being felt now that the summer is over and schools are back in session.
As they look to next year, he explained that their focus and confidence is about the momentum the business has created over the years, not just with marketing and innovation, but by leveraging “all the thinking behind revenue growth management and the price, pack, and promo architectures to maximise affordability and, therefore, accessibility of our categories for those consumers that are under pressure”.
Value packs key
Value packs or ensuring affordability for the consumer is one of the core pieces of revenue growth management for the company.
“It's about extending the price ladder and, in recessionary times, about making sure the entry price point – whether it would be on the larger packs or on the smaller packs – becomes as low down in the price spectrum for the actual out-of-pocket as possible,” Quincey said.
One consumer behaviour in recession is to try to reduce the dollar outlay of the basket, making the price point even more important than the price per litre. As a result, the company is pursuing a global strategy of having smaller bottles or smaller multipacks. In Japan, for example, it recently launched a 350ml PET bottle to meet changing consumer trends.
Quincey also explained that the company has leveraged its capabilities with returnable bottles, particularly in developing markets, as a way of generating a lower price point. “In effect, you don't pay for the packaging because it comes back again. So those returnable bottles that we refill are a way of bringing the price points down and keeping the consumer in the category.”
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