PepsiCo Trying Out New Beverage Pricing Strategy
PURCHASE, N.Y. – PepsiCo Inc. plans to tweak its drink-pricing strategy in some regions of the United States in order to ease consumers out of the habit of purchasing soda only when it is on sale, according to Reuters.
The company's new "hybrid everyday value" plan will reduce the difference between prices on holidays and regular days, while lowering prices throughout the rest of the year. For example, a 12-pack of 12-ounce cans can cost $3 to $3.50 on holidays and up to $5.99 the rest of the time.
At last week's Beverage Forum conference in New York, PepsiCo Americas Beverages CEO Al Carey stated that the new strategy has been tested with select retailers in several markets and will roll out more broadly this summer.
"This is a very important idea," Carey said. "We are way too dependent on deep discounting 12- and 24-packs of our drinks during the holidays." He added that the soda industry sells half its annual volume in approximately 12 weeks. "We have trained the consumer to wait until the price goes down and then go fill up your garage and then don't buy it again for a very long time until the price goes down."
As a result, companies pay more to store large stocked-up inventories, and sometimes product remains unsold.
"If you can get the discipline to execute this, I think it improves the profitability of the total business for us and also for our customers," Carey stated.
The Coca-Cola Co. did not comment on whether it will execute a similar strategy, according to Reuters.