Manufacturers of sweet drinks warned of rising prices

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Large Russian producers of drinks and juices PepsiCo, Ochakovo and Sady Pridonya notified retailers of a 10-20% price increase from August 1.

The price increase was influenced by the ruble exchange rate (most concentrates remain imported), the growth of logistics costs and the excise tax on sugary drinks introduced from July 1 (7 rubles per liter).

• Drinks are not essential and have a high elasticity of demand. According to a study by the National Research University Higher School of Economics, with an increase in prices for soft drinks by 1%, consumption decreases by 1.5%, recalls Agroinvestor. Consequently, manufacturers are interested not to raise prices, and the fact that they nevertheless decided to do so indicates the exhaustion of the “margin of safety” in the industry.
• According to Dmitry Leonov, deputy chairman of the board of the Rusprodsoyuz association, the “sugar” excise tax can lead to the formation of an illegal market. The industry was extremely negative about the excise even before its introduction: the prices of drinks in Russia will rise, and the niches will be occupied by manufacturers from the EAEU.
• In the first 5 months of this year, sales of all non-alcoholic beverages grew by only 1.7% in volume and 14% in value year on year. Natural sales of fruit juices fell by 10.4%, in money terms they grew by 6.4%.

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