Companies

GST impact: Coke to hike carbonated drink prices, Kinley to become cheaper

Our Bureau New Delhi | Updated on January 12, 2018 Published on June 27, 2017

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Will launch an affordable range of aerated beverages



With the implementation of GST on July 1, beverages major Coca-Cola India will hike the prices of its carbonated drinks portfolio. However, it has advised its bottling partners to reduce the price of its packaged water brand Kinley, and said it will not increase the prices of its juices and juice-based drinks portfolio.

Announcing its pricing strategy here on Tuesday, Coca-Cola India said: “The proposed tax of 40 per cent (on aerated beverages) is significantly higher than the current weighted average national tax incidence. The company has, therefore, no choice, but to minimally increase prices even after absorbing a significant portion of the tax increase.”

In a bid to pass on the benefits of reduction in tax incidence on packaged drinking water under the Goods and Services Tax (GST) regime, the company said it had advised its bottling partners to reduce prices of Kinley. Packaged drinking water has been put in the 18 per cent GST tax slab.

In a statement, T Krishnakumar, Business Unit President Coca-Cola India & South West Asia, said: “ Since GST is expected to propel India’s growth story forward, we are committed to provide our consumers with the right value for money with various refreshing options. We will pass on the taxation benefits to the consumers and make all attempts to absorb the maximum impact of the escalation of tax in some categories of our beverage portfolio.”

In the case of juices and juice-based drinks, the average tax incidence has gone up by about 2-2.5 per cent as it has been placed in the 12 per cent tax slab. However, the company has decided to absorb this increase.

Coca-Cola India also said that it will launch an affordable range of aerated beverages to cater to price-sensitive consumers. At the same time, it also plans to launch affordable “value water” segment, which will be priced “significantly lower” than the current portfolio of Kinley. As part of its “Virtuous Fruit Circular Economy” initiatives, the company has already made long-term commitments to add juices to its aerated portfolio, enhance local fruit variants within the existing juice portfolio and launch a new range of products.

Published on June 27, 2017
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