James Quincey, the CEO of The Coca-Cola Company, speaks during an interview with CNBC on the trading floor of the New York Stock Exchange, December 9, 2019.
Brendan McDermid | Reuters
Coca-Cola will raise the prices of its drinks to counter the impact of higher raw material costs, the CEO told CNBC on Monday.
The beverage company joins a number of other consumer giants, such as Kimberly-Clark and JM Smucker, in walking prices. While the move will benefit their profit margins, it could come at the expense of cash-strapped consumers who are still grappling with the economic fallout from the coronavirus pandemic.
“We are well covered in ’21, but pressure has been built up for ’22, so there are going to be some price increases,” CEO James Quincey told CNBC’s Sara Eisen about “Squawk on the Street.”
“We plan to manage it intelligently, thinking about how we use pack sizes and really optimize prices for consumers,” he added.
During the crisis, Coke shifted its production to focus on larger bulk packages to appeal to consumers who spent more time at home shopping at the supermarket. But before the pandemic, Coke and its rival PepsiCo pushed for smaller cans and bottles, which usually come with a higher price per ounce for consumers and are more profitable for the manufacturer. Pepsi executives said on Thursday they expect smaller packs to return as the crisis recedes.
Quincey has not disclosed which cola products would have higher price tags. The company last announced a price increase in 2018, citing the impact of aluminum tariffs under President Donald Trump’s administration.
Coke shares rose less than 1% in morning trading after the company reported its first quarter results. Coke’s revenues and revenues exceeded Wall Street estimates, and the company said demand hit pre-pandemic levels in March. However, executives stressed that the company is experiencing an uneven global recovery.