Schweppes hikes prices

Posted by Daniel Palmer on 22nd June 2009

Schweppes has increased the prices of their beverages by up to 10 per cent, according to a report in The Age.

Australia’s second largest soft drink beverage manufacturer will reportedly charge an extra 8-10%, representing their first price hike since 2007.

Schweppes, which was purchased from Cadbury by Asahi for $1.185 million earlier this year, has denied suggestions from analysts that the rise was due to the Japanese brewing giant seeking to gain an immediate return on investment. The maker of Pepsi in Australia has traditionally sought to win market share from their main rival – Coca-Cola Amatil – by undercutting their prices, and analysts believe the move could represent a strategy shift that will be well received by Amatil.

“At worse this is a good event (for Amatil) if it does signal that under new owners that Schweppes will be a more rational player,” Evans & Partners analyst Paul Ryan told The Age.

Schweppes had increased discounting before the takeover, a move which saw their volume share rise but placed greater pressure on margins and was considered unsustainable by analysts. The decision to boost prices may have been part of the marketing plan for Schweppes before the takeover, with discounting made in a bid to attract new customers before increasing prices and hoping to maintain as many of the ‘converts’ as possible.