Coca-Cola is pushing to raise the price for a standard can of its famous beverage in the UAE above Dh1 (27 US cents), the price it has held in the country for more than 20 years. The beverage maker submitted an application to the Ministry of Economy to raise the price to Dh1.5 at the end of last year but is still awaiting the Government's decision, said Antoine Tayyar, the public affairs director for Coca-Cola in the Middle East.
"For more than 20 years in this part of the world ? the price of a can of soft drink, be it Coke or other brands, did not change," he said. "I'm sure there were no other products that did not witness a change." He said the application for a price adjustment was prompted by many factors, including inflation, rising transportation and salary costs and, more recently, the steep rise in sugar prices. The company has received approval for price rises in some other GCC markets in recent years, such as Saudi Arabia and Qatar
"If you cannot adjust your prices, you cannot continue to make your investments [in the company]," Mr Tayyar said. David Edwards, the managing director of IMES Consulting Group, a market research and consulting company based in Dubai, said Coca-Cola's profit margins in the UAE had probably come under pressure over the years. Still, it had been difficult to raise the price because the long-standing price tag is what consumers have become accustomed to, Mr Edwards said.
"You're stuck," he said. "Strong price points have been established and people regard that as the price. And when the price is one unit of currency, such as Dh1, any price increase you make is a substantial increase." In addition, local government ministries regard these drinks as staple products. Also, there was a large proportion of poorer consumers in the UAE, for whom even a small price increase would have a big impact, he added.
There is also increased pressure on the likes of Coke from newer entrants in the market such as energy drinks and bottled water. Mr Edwards said a per-can price increase is inevitable. "I think it has to happen," he said. "When a price point is observed for 25 years, sooner or later you just have to break that because you can't carry on maintaining it." aligaya@thenational.ae
