The Hindu Business Line : PepsiCo may hike 300 ml price further

EVEN as the dust is yet to settle on the announcement by soft drinks companies that colas have become costlier by a rupee from this month, PepsiCo India is mulling a further increase in the price of its 300 ml pack size.

"The Re 1 price increase this month is not on account of cost push or any steep increase in raw material prices. This decision was taken because we were not getting any incremental penetration by continuing at lower price points and in fact, ended up subsidising those consumers who could afford to pay more for Pepsi. What we are currently debating within the company is whether the 300 ml pack size price should be further increased to Rs 8," the Chairman, Mr Rajeev Bakshi, told Business Line.

He said by raising the price of the larger pack size, the company would have "balanced the value proposition for the consumer" and will attract those soft drink consumers who can well afford the Rs 8 pricing. Also, this would further differentiate the 200 ml and 300 ml pack sizes in the consumer's mind and the value each pack size delivers, thereby altering the ratio in which each contributes to total sales.

"At present, two-thirds of my volumes come from the 200 ml pack size but if we decide to make the 300 ml costlier by another rupee, we may get the ideal 50:50 ratio between the two pack sizes in the long run," he added.

Mr Bakshi said a debate on whether to go ahead with another price increase was currently on within the company, and this decision may become effective around January next year.

While declining to reveal the percentage sales growth PepsiCo achieved in the first half of this year, Mr Bakshi said that while volume growth had kept pace with expectations, there had been no commensurate value growth, mainly due to erratic monsoons in the second quarter and due to lower price points.

PepsiCo has already increased prices of its 200 ml and 300 ml soft drink packs by a rupee each to Rs 6 and Rs 7 in select markets. These include the four southern States, Delhi, Mumbai, Punjab and Haryana. Also, there has been up to 20 per cent price hike for the large-serve PET packs though the 500 ml PET pack prices have been left unchanged at Rs 15.