Your Coca-Cola drink will become costlier in India soon
What's the story
SLMG Beverages, the largest bottler for Coca-Cola in India, is considering raising prices due to escalating packaging costs. These costs are linked to the ongoing war in West Asia. Rahul Kumar, Deputy CEO at SLMG, said if the conflict continues, packaging material costs could keep rising. The company will review its pricing strategy in April.
Cost increase
Essential packaging materials affected
The ongoing war is driving up the costs of essential packaging materials such as plastic bottles, caps, labels, and cardboard boxes. Some packaged water manufacturers have already started increasing their prices in response to these rising costs. Kumar said that any potential price hikes by SLMG would depend on competitor actions and consumer reactions to higher prices.
Market dynamics
Price competition in soda market
The potential price hikes come as Mukesh Ambani's Reliance Industries revived a historic local cola brand, Campa, in 2023. The move has sparked a price war in the highly competitive soda market with several national and local players. Kumar said there's limited scope for price hikes given this competition and that SLMG hasn't raised prices across its portfolio in the last 7-8 years.
Future strategy
SLMG's growth plans
Despite the competitive landscape, Kumar believes competition will only grow India's soft drink market by bringing in new consumers. To tap into this growth, SLMG plans to invest ₹1,000 crore-₹1,200 crore in each of four new plants over five years. The company accounts for over 22% of Coca-Cola's India volumes and aims to hit a net revenue target of ₹10,000 crore by FY27.