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Scott Jagow: Coca-Cola turned in its profit report yesterday. It was better than expected, but it still wasn’t very good, so Coke is going to raise its prices.
Sam Eaton reports.
Sam Eaton: Higher commodity and bottling costs have eaten into Coca Cola’s bottom line. The solution, at least for Coke’s bottling company Coca-Cola Enterprises, is to pass those costs on to consumers.
But retail analyst Phil Lempert says the strategy may backfire.
Phil Lempert: When we look at the soda business, we’re seeing sales decline year after year for almost the past decade. So when you have price increases hitting, more consumers are going to be looking at that bottle of Coca-Cola and saying, “Do I really need this?”
Especially with the recent run-up in food costs, Lempert says consumers are foregoing soda pop for more essential items like milk and bread and if they do splurge on bottled drinks, they’re more likely to buy generic store brands at a lower cost.
Lempert says instead of raising prices, Coke should innovate, and the first place to start, he says, is by speeding the launch of drinks sweetened with Stevia, the first all-natural zero calorie sweetener.
In Los Angeles, I’m Sam Eaton for Marketplace.
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