For Carlos Hermosillo, an independent analyst, any rise in the price of consumer products usually generates a “transitory effect”, that is, demand may fall for a few weeks, but usually returns to previous levels. “For this reason, I would hope that the volume recovery that we have seen in soft drink consumption will not be interrupted by these price changes,” he detailed.
Cuauhtémoc Rivera, president of the National Alliance of Small Businesses (ANPEC), agrees with the analyst. The shopkeepers’ representative does not foresee that the new prices will lower the sales of Coca-Cola and other beverages, because the adjustment is made at a time of high consumption. “Because of the heat, now is when more drinks are being sold,” he says.
The Coca-Cola Company has 67 bottling plants, 350 distribution centers and more than 13,000 delivery routes in the country, which are operated by the Mexican Coca-Cola Industry, which includes Coca-Cola Femsa, Arca Continental and six more bottlers.
Expansion asked the Mexican subsidiary of Coca-Cola Company to find out if the increase in products will be extended to all the company’s bottlers in the country, but was not available to comment on the matter.
Strategies to mitigate the rise in raw materials
Coca-Cola Femsa told Expansionthrough its Corporate Communication area, that the increase in its prices is due to the inflationary pressures in several of its raw materials. “Like most companies, we have faced rising prices for the raw materials we use to make our products.”
Like Coca-Cola Femsa, Arca Continental, another of the US giant’s bottlers in Mexico, which distributes and markets the product in the north of the country, has spoken about the challenges it faces due to the higher price of PET, sweeteners and aluminum.
In addition to the price increase, the bottling companies have chosen to seek efficiencies in their supply chains and promote the returnable presentations of their different products, in order to mitigate the increases in PET.
Arca Continental also launched a new smaller package, 250 milliliters in non-returnable PET, for Coca-Cola soft drinks with the slogan “Friends of the Pocket”.
“This new presentation allows us to provide affordability, attract new consumers and capture additional market share in traditional and modern channels,” the company said in its financial report. And the results have been positive: Arca Continental recorded a 13.8% rise in sales to 46,065 million pesos during the first three months of the year, from 40,475 million in the same period last year.
Rivera says that in recent months there has been a “high demand” for the smaller presentations and of those who have a Returnable packaging, which are cheaper for buyers. However, he considers that there is a lack of packaging to meet the growing demand. “A lot of companies want to go back to returnables, but there’s not enough packaging,” he says.