Coca-Cola distributor in Japan plans to pass higher transport costs on to customers. This has happened first time in last 27 years and it is expected that this move could unleash a wave of inflation in a risk-averse industry.The retail prices are expected to rise by between 6% and 10% from April. It is going to impact soda, juice and tea starting with 1.5-liter and 2-liter bottles. The bottling company is considering whether to raise prices for other bottle sizes.
Retailers also put strong pressure on bottlers to keep prices down. As the food companies are raising prices to offset higher transport and materials costs, now the next turn is for beverage to use the same idea.
The expected retail price of 1.5-liter Coca-Cola bottles is expected to rise to between 340 yen and 352 yen ($3.06 to $3.17) excluding tax, up from the current 320 yen. Earlier, supermarkets were selling 1.5-liter bottles for 138 yen on average in October, according to Nikkei point-of-sale data. If stores fully reflect the suggested increases, prices would go up to between 146 yen and 152 yen.
There was no price hike from last three decades and the company was struggling to improve profitability. Its operating margin for 2017 came to about 4%. The rest of the world’s five biggest Coca-Cola bottlers by sales have profit margins of 10% or more. Japan’s Coca-Cola Bottlers lags despite ranking third overall in sales.