Coke & Pepsi Pricing?

Interesting conversation with my Pepsi friend last night…we went to college together and he has been with Pepsi Bottling for 10 yrs…

So we were talking about margins and pricing and I told him it was absurd what pricing is to QSRs etc. And he said that if the bottling group had its way, they would price the BIBs at 100 a case.

I tried to explain to him that margins arent what he thinks and those who arent in the rest industry think. He thought that at a buck a 2 litre the rest was making a killing selling at 2. I told him that is actually untrue, that gross margins on most product is near a 3X return (30% food cost vs revenues) and he just didnt get it…

He also thought the price to serve a fountain 32 oz drink was a nickle over the syrup cost.

I would hate to see what effect higher prices on BIBs would do to other menu items…without the decent margin on soda, most QSRs would need to raise other prices to compensate.

We’re small too … and face similar soft drink servicing issues. We also have equipment supplied by Coke, so we’re bound in some “strange” ways, such as:

  1. We cannot buy BIB from Sam’s Club, because Sam’s makes you complete a form that you are not a Coke customer currently and using their furnished equipment. However, their BIB is about $10 a box cheaper than Coke distributor prices.

  2. Our delivery requires a minimum of 5 pieces. Cases of 20oz., syrup, etc. Even though Coke’s truck parks ACROSS our entrance once a week delivering to a convenience store, we cannot get delivery without meeting their minimums.

  3. Our dining room cooler is used for 2 liters and cans. The ONLY snag I’ve had with Coke is their rep came in once (RARE VISIT!) and noticed I had other products than Coke’s in it and told me I couldn’t do that. Fine, I still buy my 2 liter and cans at “retail” from grocery stores and Wal Mart for MUCH LESS than Coke’s price.

I understand some obligation for using their equipment, but 10-15% premium would be acceptable if they would even hold us up that much. I am too small to be important, but I’ve got to make a profit. So … until they take my equipment away, I buy BIB from them and carryouts from retail businesses. I figure I’ll defend it with the fact that I’m STILL supporting them by buying their product anyway.

Anybody wanna provide an update as to how the pricing is shaking out these days?

We only do bottles. Including depost… .99 cents for 20 ounce and 1.38 for 2 liters.

Well, we are way out in the backwoods in a very small town. One grocery store in town and we keep our prices the same as theirs…

Pepsi products

20oz bottles: cost $.89 each, sell for $1.59 each
2 Liters: cost $1.50 each, sell for $2.49

Occasionally the store has sales, which makes their prices lower, but I really only do the bottled soda for customer convenience, not to make any real money. I don’t mind paying a little more, as they are providing us with equipment and top notch service (well and we are 60+ mountainous miles from anything cheaper).

It’s interesting to note that although Coke provided the previous owner with coolers, bib dispenser, signage, etc., they would not do it for us. Only the bib dispenser. So I went with Pepsi and got 3 coolers, bib dispenser, signage, price markers, and a couple of cases of in-store plastic 20oz plastic cups. Pepsi was very easy to deal with, and Coke wanted to play hardball.

Coke also wanted to charge $60 per tank of CO2, where Pepsi was only $45 (not including the bottle refund of $30)…now how ridiculous is that?

I dont Carry 20’s but my 2 liters are 1.69. I buy them from who ever has them on sale. (Our delivery driver tells us who has them on sale each week.) We sell them for 225.

I buy 2 liter and 16 oz from the supermarket in our plaza when they are on sale, when not, Wal-mart. I average about $1.25 for 2 liters and $3.00 per six-pack for 16.9 oz. Sell 2 liter for $2.29, 16.9 for $1.29.

Coke has priced themselves out of consideration in our shop.

Rick

Our Pepsi BIBs are in the $63.00 neighborhood, pretty much where they’ve stayed since we opened 2+ years ago. In the last couple of months I priced Coke on a lark, BIBs varied on the product, but the top selections were get this…$85! Our area distributor has a 5 BIB minimum order, won’t even consider stopping the truck for less. Pepsi is 2.

So yeah…we’re still hawking Pepsi. “Have a Coke and a smile…”