PepsiCo, Sady Pridonya and Ochakovo plan to raise prices by an average of 10-20%
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The increase in the price of imported ingredients due to the depreciation of the ruble and the introduction of an excise tax on sugar leads to an increase in the prices of drinks. Thus, PepsiCo, Sady Pridonya and MPBK Ochakovo are planning to raise prices by an average of 10-20%.
Large producers of drinks and juices PepsiCo (brands Russky Dar, Frustyle, Lyubimy, J7, etc.) and Gardens Pridonya notified retail chains of price increases from August 1. Kommersant has copies of the July letters from companies to partners.
PepsiCo, the company said in a statement, plans to raise prices for drinks and juices by 19.2-21.3% due to the depreciation of the ruble, which caused an increase in costs. The company also announced an increase in snack prices by an average of 15.3%. Gardens Pridonya warned about indexation by 10% due to the rise in the cost of raw materials, materials, equipment maintenance and transport services. The companies did not provide comments.
MPBK Ochakovo (Goodini juices, CoolCola, Street, Fancy drinks, etc.) told Kommersant that they also plan to raise prices for juices by 10% due to the impact of the growth of the ruble exchange rate on the cost of raw materials and due to the cost of logistics. The company has already increased prices for carbonated soft drinks by 10% from July 1 due to the introduction of excise tax, Ochakovo reported.
From July 1, 2023, an excise tax of 7 rubles. Beverages with a sugar content of more than 5 g per 100 ml are taxed per 1 liter. Multon Partners (Dobry) and Chernogolovka Group of Companies (Fantola, Baikal, etc.) did not provide comments.
A Kommersant source in a large network noted that the issue of price increases will probably still be discussed during the negotiations. The increase in prices can be offset by promo, another source added to Kommersant. In early July, a Kommersant source in another network said that suppliers were “very nervous” because of the jump in the ruble exchange rate, sending notifications of price increases by 10-15%, which have not yet been accepted. X5 Group (Pyaterochka, Perekrestok), Magnit, Lenta, Auchan and Metro did not comment.
Marat Ibragimov, a senior analyst at Gazprombank, says that in the context of a general increase in costs, indexation is unlikely to be avoided, and due to the high sensitivity of consumers to prices, most likely, the increase will be smooth. The head of the Union of Producers of Juices, Water and Drinks (“Soyuznapitki”) Maxim Novikov notes that the industry has a high price pegging to exchange rates: in the cost of juices, according to him, about 70% of the costs are accounted for by imported concentrated juices and purees.
In the case of drinks containing sugar, an additional factor seems to be the excise tax that is paid during production, adds Mr. Novikov. One of the founders of Famous Amazing Brands (Vanilla Flight and Anarchy drinks) Anton Stelmakov notes that, taking into account the introduction of excise tax, indexation could be more.
According to the NielsenIQ retail audit, in January-May 2023, sales of all non-alcoholic beverages grew by 1.7% in volume and by 14% in money terms year-on-year. The only category that showed a decrease in in-kind sales was fruit juices — by 10.4% — with an increase of 6.4% in money terms year-on-year. According to Mr. Stelmakov, in the previous exchange rate fluctuations, the demand for drinks decreased in volume during the next quarter, and then recovered. Perhaps some consumers will switch to cheaper brands, he adds.
Dmitry Leonov, deputy chairman of the board of the Rusprodsoyuz association, says that the growth of tariffs for cargo transportation, exchange rate turbulence and difficulties in the commodity markets can affect the dynamics of the cost of various categories of goods. In the short term, there are no prerequisites for changes, but the situation may be affected, for example, by the stabilization of the ruble exchange rate, Mr. Leonov noted.
The Ministry of Agriculture confirmed to Kommersant that manufacturers of food products, including drinks, are affected by rising prices for packaging and ingredients supplied from third countries, and excise duty on sugar-containing drinks is exerting additional pressure. Meanwhile, the production of beverages and juices is growing and consumers have ample choice in different price categories, the ministry added.
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