Cocal Cola Israel will lower prices on its family-sized (1.5 liter) bottles. The new prices will be printed on the labels, in order to prevent situations whereby retailers might attempt to slide extra profits into their own pockets. Coca Cola wants the full discount to reach consumers, which will subsequently increase product purchases. Coca Cola also wants private retailers to honor its new pricing policy.
This interesting procedure stems from the narrowing of Coca Cola’s share of the soft drink market, due to increased competition from lower-priced brand names, such as RC Cola, Pepsi and American Cola (manufactured by Cott). The move is part of an overall strategy, taken with the consent of parent company Coca Cola International, together with the market penetration of family sized Classic Coke bottles.
As part of the procedure, for the first time in its history, Coca Cola products will be priced on three levels. One single 1.5 liter bottle will sell for NIS 3.69, instead of NIS 4.25. Six packs of family sized bottles will sell for NIS 3.39 per bottle, and a purchase of 12 bottles will reduce the per unit price to NIS 3.29.
The single unit price applies to all Coca Cola products, including Sprite and Kinley orange soda. Six pack prices apply to both Coca Cola and Diet Coca Cola, while 12 pack prices apply only to Coca Cola.
Sources within the soft drink industry say that steps were taken to close the price gap between Coca Cola products, and the competition. This gap had reached over NIS 1 in certain cases, or between 25-35%. Sources also say that Pepsi’s market share has remained low, while RC Cola continues to take bigger pieces of the pie. Because RC Cola’s power was underestimated, sources say, it succeeded in taking away 15% of Coke’s market share.
The tri-level pricing plan, approved by Coca Cola International, will be put into effect by the end of December and is intended to raise sales significantly.
And what is the reaction of Eli Davidai, CEO of RC Cola manufacturer Jaf-Ora Tabori, to all the fuss? Davidai: "I wish them luck. We’ll meet in the marketplace. I have a backup plan ready in such cases. This is a strong measure taken by Coca Cola, which should be examined."