The bottlers are seeking an increase of anything between nine and 18 per cent on each case of 24 bottles of 300 ml volume. Each case today costs about Rs 136 to the retailer.
In markets like Delhi, which are already reaching saturation levels, an increase could mean a sharp tumble in sales. The bottlers have, therefore, sought a minimal increase of about Rs 12 per case in such markets. Markets in the south may, however, witness a hike closer to Rs 24 per case.
Should the increase come about, each beverage bottle will be costlier by at least one rupee. By the beverage companies' own admission, such a move might hurt the extremely price-sensitive product. This may be the reason why beverage companies are planning to wait it out to ensure that the product remains affordable.
Industry sources say that one of Pepsi's key bottlers had approached bottlers of other beverage companies to join him in pressuring the companies. Subsequently, bottlers from the south joined hands.
Soft drink majors, while refusing to go on record, confirmed that bottlers had been asking them to increase the prices. The pressure is maximum from bottlers in states where basic distribution costs have gone up. An increase in distribution costs has been attributed to a number of factors including higher sales tax, fuel costs, cost of glass float, cost of cases and that of sugar. Certain bottlers have also cited the increase in beverage concentrate prices as the prime reason behind their demand. Beverage concentrate is sold to the bottler by the soft drink companies, and industry sources confirm that concentrate prices have gone up by nearly 20 per cent.
According to one beverage company, an increase is imminent in certain states like Maharashtra and Andhra Pradesh where sales tax has gone up considerably. Further, beverage companies would feel more comfortable in introducing a price rise in markets which still have elastic volumes.
In areas where an increase is inevitable, beverage companies would be introducing the new price during the busy period so that they can ride the crest of the season without the move becoming too conspicuous. This way, a company could derive initial volume benefits.