Recently, the news of Coca-Cola’s price increase has attracted the attention of the industry. Some netizens directly called “the happy water in the fat house is not happy anymore.” In fact, not only Coca-Cola, but also affected by factors such as rising raw material costs, many beverage companies have raised the prices of their products this year.
Sino-Singapore Jingwei recently visited offline supermarkets, convenience stores and other retail channels and found that, except for mineral water, there are very few beverages below 3 yuan, and products above 5 yuan are occupying more places in the beverage area.
Photo by Zhongxin Jingwei in the beverage area of a supermarket in Wuhan
Coca-Cola not only raised prices but also sold out?
Recently, Sino-Singapore Jingwei visited many supermarkets, convenience stores, and community supermarkets in Beijing and found that the price of Coca-Cola has risen in different ways. It sold for 3.8 yuan, but some supermarkets and convenience stores still maintain the retail price of 3.5 yuan.
According to public reports, since returning to the Chinese market in 1979, Coca-Cola’s product prices have not risen significantly for more than 40 years. According to a previous report released by Guosheng Securities, from 1990 to 2019, the compound growth rate of Coca-Cola’s product unit price was 0.42%.
The last large-scale price increase of Coca-Cola in the Chinese market was in November 2021. According to the price adjustment information released at that time, starting from November 1, 2021, the suggested retail price of 500ml Coca-Cola in China will increase from 3 yuan to 3.5 yuan , up 0.5 yuan.
In response to the recent price increase, Sino-Singapore Jingwei contacted the relevant person in charge of Coca-Cola China many times in an attempt to learn more information, but as of press time, no reply has been received.
In addition to the price increase, there are recent media reports that due to the unstable supply of raw materials, Coca-Cola series products have been out of stock in the UBO unmanned retail channel in the Beijing market for a period of time. The relevant person in charge of Youbao said that the entire Beijing area is temporarily out of stock and will be replaced by Pepsi products, and the recovery time is uncertain.
In this regard, the relevant person in charge of COFCO Coca-Cola Beijing Company responded to Sino-Singapore Jingwei on the evening of the 24th, saying, “Our product supply is normal, and there is no problem of insufficient supply.”
The Coca-Cola manufacturer in the Beijing area is COFCO Coca-Cola, which is one of the two bottlers of Coca-Cola China in the Chinese market.
But it is undeniable that the supply of raw materials is indeed a major factor affecting the entire carbonated beverage industry.
According to a CCTV financial report, the recent armed conflict in Sudan has continued, which has made global carbonated beverage manufacturers feel anxious. Because gum arabic exported from Sudan is a key material for making carbonated beverages, if the export of gum arabic is interrupted, the world’s major carbonated beverage producers may face the danger of cutting off supply within a few months.
Many beverage companies raise product prices
In fact, since the beginning of this year, many beverage companies have raised the prices of their products.
First, at the end of January 2023, a dealer posted a message in the circle of friends, saying that according to the “China Resources C’estbon’s Notice on Distributor Terminal Price Adjustment”, starting from March 1, 2023, C’estbon pure water will increase by 1 yuan per piece; Then, on February 1, Nongfu Spring’s “Hangzhou Area 19L Water Price Adjustment Notice” was circulated in the industry. From February 1, 2023, the retail price of 19L bottled water in Hangzhou Nongfu Spring will increase from the previous 20 yuan/barrel to 22 yuan/barrel, the price adjustment range is 10%.
At the beginning of February, Yakult’s original flavor and low-sugar products of 10 billion live bacteria also began to increase in price, from 11.7 yuan and 12.7 yuan to 12.8 yuan and 13.8 yuan respectively.
Subsequently, JuneYao Health, known as the “first stock of lactic acid bacteria beverages”, also issued an announcement on February 12 that it would adjust the ex-factory prices of some products of the “Wei Power” brand by about 3% to 6%. The new price enforcement will come into effect on March 1, 2023.
According to media reports, since April 1, the price of the electrolyte water brand Pocari Sweat has been adjusted successively. Among them, the price of the 500ml product has been increased for the first time in nearly 23 years, and the increase rate is about 0.5 yuan. Sino-Singapore Jingwei saw that in a supermarket chain in Beijing, the price of 500ml of Pocari Sweat is 5.5 yuan, and convenience stores are relatively expensive, and some stores sell for 6 yuan.
In addition to the price increase of basic products, the prices of new products of major beverage companies are generally higher than that of existing products. Take the new black oolong original tea drink recently launched by Dongfangshuye, a brand of Nongfu Spring, as an example. In a convenience store in Beijing, the product is priced at 5.8 yuan, while jasmine tea, green tea, oolong tea, etc. The original tea drink launched earlier is priced at 5.5 yuan.
In addition, in February this year, Yakult launched the “Little Gold Bottle” product with 50 billion live bacteria-type lactic acid bacteria milk drinks and low-sugar golden packaging. The price is 16.8 yuan, which is also higher than the original 10 billion live-bacteria-type products.
Interview: Drinks over 5 yuan occupy more places
The price of existing products is increasing, and the price of new products is higher. Drinks are becoming more and more expensive, which has become a common feeling among consumers.
“In the past two years, it is obvious that beverages have become more and more expensive, especially the new beverages, many of which start at 5 yuan. I remember that they were generally around 3 yuan before.” With the advent of summer, Mr. Zhao from Beijing thought He stocked up some drinks in the refrigerator, but the price starting at 5 yuan made him resolutely give up some new flavors. In the end, he chose the products he often bought before, but he could clearly feel that the price had risen.
“For example, the 300ml bottled Sprite I bought on the e-commerce platform two years ago cost only 15.9 yuan for 12 bottles, and now it has risen to 19.9 yuan.” Mr. Zhao said.
On social platforms such as Weibo and Xiaohongshu, many netizens also reported that “all the drinks now cost more than 3.5 yuan.”
Recently, Sino-Singapore Jingwei visited supermarkets and convenience stores in Beijing and found that beverages above 5 yuan are occupying more places in the beverage area.
In a community supermarket, the drinks below 3 yuan are mostly mineral water and small-sized cola, sprite, soda water, etc., the standard fruit juice drinks, tea drinks, etc. are generally more than 3 yuan, and sports drinks and sparkling water are more In more than 5 yuan. In the refrigerated freezer of the supermarket, beverages around 5 yuan occupy more places.
In addition, in the online channel of a convenience store, apart from mineral water, there is only one 300ml carry-on Coca-Cola that is less than 3 yuan, and the price is 2.1 yuan. A total of 37 types are priced between 3-5 yuan, 5 yuan There are a total of 82 types above, and the most expensive drink is 27.1 yuan a bottle, which is a 480ml whole plant drink (No. 2); in another convenience store, there are 32 drinks less than 5 yuan, 5 More than 70 yuan.
Not only in Beijing, but also in many supermarkets and convenience stores in Wuhan. Most of the beverage products such as milk tea, pure fruit juice, low-sugar tea drinks, and electrolyte water are priced at more than 5 yuan. Among them, in the refrigerated freezer of a convenience store, except for carbonated drinks, the price of other drinks is mostly 4-6 yuan, and the most expensive one is sold for 9 yuan.
Why are drinks getting more expensive?
In the past two years, an important reason why beverages have become more and more expensive is the rise in raw material prices.
JuneYao Health mentioned in the announcement that the ex-factory price increase of some products of the company’s “Wei Power” brand was mainly due to the continuous increase in the cost of the company’s main raw materials, transportation, packaging materials and auxiliary materials.
At an analyst performance meeting in March 2022, Zhou Zhenhua, executive director of Nongfu Spring, once said bluntly that the cost pressure has “exceeded the level that the company can unilaterally digest”, and Nongfu Spring’s first choice is to digest costs by improving operating efficiency, while Due to the large changes in the market and cost, and the price adjustment of competing products, Nongfu Spring is also continuing to wait and see.
Yakult said in an interview with the media that the price increase of the company’s products is also due to the continuous increase in operating costs such as raw material prices in recent years.
In February this year, Nestle Switzerland CEO Mark Schneider announced that in response to rising raw material prices, the company’s products will have to continue to increase prices this year, but did not specify the price increase. The data shows that in 2022, the price of Nestlé products has increased by 8.2%.
As early as November 2021, before the Coca-Cola China sales area raised the retail price of products, Coca-Cola CEO James Quincy reminded consumers on April 19 of that year that Coca-Cola would increase beverage prices to cope with the impact of rising commodity costs. .
Zhu Danpeng, vice president of the Guangdong Food Safety Promotion Association and food industry analyst, told Sino-Singapore Jingwei that in the past two years, due to factors such as the epidemic, the cost of raw materials, logistics costs, and personnel management costs in the food and beverage industry have all increased. A certain level of increase has led to the retail end of the product having to take measures to increase prices.
Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting Company, also mentioned that under the influence of the epidemic and other factors, the overall efficiency of the beverage industry has declined, and the cost of raw materials has risen, so that companies have responded by raising prices.
According to media reports, on May 5, 2023, the Food and Agriculture Organization of the United Nations released data showing that the sugar price index averaged 149.4 points in April, an increase of 22.4 points (17.6%) month-on-month, rising for three consecutive months, the highest since October 2011 new high.
Domestically, sugar prices are also rising. According to data released by the China Sugar Association, as of the end of April 2023, all beet sugar factories have shut down, and except for three cane sugar factories in Yunnan Province, which are still in production, sugar factories in other provinces (regions) have all closed down. During the 2022/2023 sugar production period, the national sugar production will be 8.96 million tons, a year-on-year decrease of 390,000 tons. The cumulative average sales price of finished white sugar in the national sugar industry enterprises was 5,865 yuan/ton, a year-on-year increase of 129 yuan/ton.
In addition to rising sugar prices, the price of PET (a high molecular polyester material), the main raw material for beverage packaging bottles, is also rising. Nongfu Spring mentioned in the 2022 annual report that the price of crude oil will rise in 2022, and the price of raw materials such as PET, which is a downstream product of crude oil, will also rise significantly. cost pressure.
The data shows that Nongfu Spring’s gross profit margin in 2022 will drop from 59.5% in the same period last year to 57.4%, and the reason is the increase in PET procurement costs. The Everbright Securities Research Report pointed out that from the perspective of cost, the cost pressure of Nongfu Spring may be slightly relieved in 2023, and it is necessary to pay close attention to changes in crude oil prices in the future.
In April this year, Wankai New Material, a domestic bottle-grade PET manufacturer, said in response to investor questions that the price focus of product bottle-grade PET and main raw material PTA in the first quarter of this year has risen compared with the beginning of the year, and the price trend in the second quarter needs to be integrated with upstream prices, Downstream demand, industrial chain supply and demand and other aspects are analyzed.
In other words, beverage companies may still face greater cost pressure in the future.
Original title: Why are there fewer and fewer drinks below 5 yuan?Rising prices of raw materials put pressure on corporate costs
Editor in charge: Zeng Shaolin
2023-05-29 00:22:00
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