May 22 PepsiCo Inc said it is tweaking
its drink-pricing strategy in some parts of the United States,
as it aims to wean consumers off the habit of buying soda only
when it is on sale.
The strategy, which PepsiCo refers to as "hybrid everyday
value," involves narrowing the gap between soda prices on
holidays and regular days. It aims to lessen the discounts on
holidays, when a 12-pack of 12-ounce cans can cost as little as
$2.50 to $3, and lower prices throughout the rest of the year,
when the same package can cost as much as $5.99.
The strategy has been tested with a few retailers in several
markets and is rolling out a little more broadly this summer,
said PepsiCo Americas Beverages CEO Al Carey this week at the
Beverage Forum conference in New York.
"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."
The entire industry sells half of its annual volume during
roughly 12 weeks, he said, with the remaining 50 percent sold in
the other 40.
"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," he said.
That has made the economics of the soft-drink business very
challenging for drink makers and retailers, who often use
discounts on soda to drive traffic. It costs companies more to
store the big inventories they have built up, hurts employee
morale and sometimes leads to unsold product.
"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 said.
Coca-Cola Co declined to comment on whether it was
pursuing a similar strategy.