PURCHASE, N.Y. -- PepsiCo Inc said it is adjusting its pricing strategy for its drinks in some sections of the United States in an effort to wean consumers off a habit on only buying soda when it's on sale, reported Reuters.
The strategy, which PepsiCo refers to as "hybrid everyday value," involves narrowing the gap between soda prices on holidays and regular days. It aims to lessen the discounts on holidays, when a 12-pack of 12-ounce cans can cost as little as $2.50 to $3, and lower prices throughout the rest of the year, when the same package can cost as much as $5.99.
It has tested the strategy with a few retailers in several markets, and the company is rolling it out a little more broadly this summer, said PepsiCo Americas Beverages CEO Al Carey this week at the Beverage Forum conference in New York.
"This is a very important idea," Carey said. "We are way too dependent on deep discounting 12- and 24-packs of our drinks during the holidays."
The entire industry sells half of its annual volume during roughly 12 weeks, he said, with the remaining 50% sold in the other 40.
"We have trained the consumer to wait until the price goes down and then go fill up your garage and then don't buy it again for a very long time until the price goes down," he said.
That has made the economics of the soft-drink business very challenging for drink makers and retailers, who often use discounts on soda to drive traffic, said the report. It costs companies more to store the big inventories they have built up, hurts employee morale and sometimes leads to unsold product, the news agency said.
"If you can get the discipline to execute this, I think it improves the profitability of the total business for us and also for our customers," Carey said.
Atlanta-based Coca-Cola Co. did not immediately respond to a request by Reuters for comment on whether it was pursuing a similar strategy.
Purchase, N.Y.-based PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. Its main businesses are Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola.
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