Soda. Pop. Whatever you call the bubbly beverage, you probably have noticed the price increase in recent years.
What hasn’t increased? Inflation is at a 40-year high, and soft drink lovers haven’t been spared the cost when buying bottles or cans.
“It’s upwards of $7 a 12-pack. No way. That’s just ridiculous,” said 42-year-old Rachel Hatfield, a retail worker from Canal Fulton.
“We don't even buy it anymore. I used to enjoy one, maybe two a day. But even before inflation, I wouldn't purchase it unless there was a three for $10 or $12 deal going on. I can get two gallons of gas for the price of a 12-pack; I simply can't justify that in my already tight budget."
The cost of soda has gone up 45 percent in less than four years
The average cost of a 12-ounce can in a 12-pack of soda was 35 cents in January 2019. Now, the average cost for the same beverage is 51 cents, according to the U.S. Bureau of Labor Statistics. That’s a more than 45% increase in less than four years.
At Target in Jackson Township, the cost of a 12-pack of Diet Pepsi was $4.99 in September 2020. The price was the same nine months later. But by September 2021, the cost for the same 12-pack rose to $5.49. And as of Sept. 1, the cost is now at $6.69 for that same 12-pack. It has a slight edge compared to a 12-pack of Diet co*ke, which retails at $6.79.
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“$7 for a 12 pack. That’s just stupid money,” North Canton resident and local Airbnb host Rebecca Dunn shared in an informal poll on Instagram regarding soda price increases.
Louisville resident and local teacher Kaytlin McCoy agrees that prices are out of control.
“My husband and I are the only soda drinkers in our house. We both teach and use it as a quick, sugar-free caffeine fix during the school day, since we also only drink zero sugar. With the prices going up, it’s really cutting into our grocery budget, so now we limit ourselves to one to two cans per day,” 33-year-old McCoy said.
“I understand we can just stop drinking it to save some money, but we both work full time and each have a master's degree. There’s no reason why we can’t ‘splurge’ a little. The prices, though, are just asinine.”
McCoy also mentioned that the cheapest place they have found to buy soda is Sam’s Club in Jackson Township, which is a trek from their Louisville home, so they have to make trips worthwhile and stock up on other goods.
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Shopping online from local retailers Acme Fresh Market and Fishers Foods will cost you even more than big-box stores. A 12-pack of Diet Pepsi costs $7.99 at both stores, while Diet co*ke’s 12-pack of cans will run you $8.99 at Acme and $7.99 at Fishers.
What's behind the rising soda prices?
What’s causing the alarming increase?
Inflation can be blamed for part of it, but that’s not the whole story behind the skyrocketing prices.
The price increases started in early 2020, when people were panic buying because of the pandemic. Prices continued to rise in the soda industry thanks to the cost of aluminum increasing. According to Reuters in an early 2021 report, the cost of aluminum climbed about 60% over the course of a year.
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Inflation caused prices to rise across all categories, but soda prices have continued to go up at overwhelming rates.
Even with the price increase, beverage giants, like PepsiCo Inc. and Coca-Cola Co., haven’t seen a decrease in demand, according to Reuters. Because there isn’t much competition in the beverage industry outside of these two huge corporations, they likely will raise the rates even higher.
During the second-quarter earnings call for Coca-Cola Co., Chairman and CEO James Quincey mentioned that consumer elasticities held up better than expected for the year to-date. But the company will be closely watching for changes in consumer behavior “as the average cost of the consumer basket continues to go up,” said Quincey.
Even with all the turmoil with prices caused by the pandemic, Coca-Cola Co. has bounced back and hopes to continue growing.
“We have managed a broad-based recovery coming out of the pandemic, our five-year average organic revenue growth rate is at the top end of our long-term growth target of 4% to 6%, which is a proof point of our transformed and strengthened organization,” Quincey said. “As we look to the second half of the year, we will continue to focus on raising the bar on the elements of our flywheels for top-line growth.”
Coca-Cola Co. CFO and Executive Vice President John Murphy chimed in that the company will be closely monitoring consumer behavior and will adapt accordingly, possibly meaning prices could dip. But soda drinkers shouldn’t get their hopes up just yet.
“Other costs, including wages, transportation, media and operating expenses are also increasing and adding incremental pressures,” Murphy said, which likely means costs will be pushed to the consumer.
How much is too much? When will consumers not be willing to pay the price?
It looks like the duopoly of PepsiCo Inc. and Coca-Cola Co. are willing to find out. According to Reuters, PepsiCo said it “expects fiscal 2022 core revenue to rise 10%, compared with a previous forecast of an 8% increase."
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Now, let's discuss the concepts mentioned in the article about the rising prices of soda.
Rising Soda Prices and Inflation
The article highlights the increasing prices of soda in recent years, despite the ongoing inflation. The cost of a 12-pack of soda has gone up by 45% in less than four years, according to the U.S. Bureau of Labor Statistics. The price increase can be attributed to various factors, including inflation and the rising cost of aluminum .
Factors Contributing to Price Increase
The price increases in the soda industry started in early 2020, during the pandemic, when people engaged in panic buying. Additionally, the cost of aluminum, a key component in soda cans, has increased by about 60% over the course of a year.
Impact on Consumers
Consumers have expressed their concerns about the rising prices of soda. Many individuals have had to adjust their consumption habits due to budget constraints. Some have reduced their soda intake or limited themselves to one or two cans per day. The increasing prices have put a strain on grocery budgets .
Beverage Giants and Competition
Despite the price increases, beverage giants like PepsiCo Inc. and Coca-Cola Co. have not seen a decrease in demand. These two companies dominate the beverage industry, and their lack of competition allows them to potentially raise prices even higher. However, they also closely monitor consumer behavior and may adapt their pricing strategies accordingly.
Other Costs and Consumer Basket
In addition to the rising cost of aluminum, other factors such as wages, transportation, media, and operating expenses contribute to the overall increase in prices. These incremental pressures may lead to higher costs for consumers. The average cost of the consumer basket continues to rise, which may impact consumer behavior and purchasing decisions.
Future Outlook
The article mentions that PepsiCo expects a 10% increase in core revenue for fiscal year 2022, compared to the previous forecast of an 8% increase. This indicates that the beverage giants are willing to test the limits of consumer willingness to pay higher prices. However, factors such as changes in consumer behavior and overall market conditions may influence future pricing strategies.
In conclusion, the rising prices of soda can be attributed to various factors, including inflation, the cost of aluminum, and other operational expenses. Consumers have expressed concerns about the affordability of soda, and beverage giants like PepsiCo and Coca-Cola continue to monitor consumer behavior and adjust their pricing strategies accordingly.
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