Ukraine Conflict Executive Briefing

Many manufacturers had already begun to pass price increases on to consumers before the Ukraine crisis and these moves have continued.  

Movements on price remain a key strategy for manufacturers to offset the impacts of rising inflation. Major beverage groups, from Carlsberg to Heineken and from The Coca-Cola Co. to Campari have moved to up prices in recent quarters. Some drinks groups, including PepsiCo and Danone, have indicated they are likely to look to increase prices further. 

The crisis has added to the inflation pressure consumers were already facing as the global economy opened up after the depths of the pandemic. Changes in consumption patterns are being seen across FMCG categories, as shoppers grapple with rising prices, higher energy and fuel costs, and squeezed disposable incomes. 

However, many drinks companies have said consumer demand appears to be broadly holding up despite rising prices. 

Speaking to Just Drinks last month, Paul Graham, the MD of the UK arm of soft-drinks group Britvic, said: “Historically, soft drinks have remained resilient in times of economic downturn compared to other categories but we are in uncharted water here… the scale [of inflation] is so big. 

“We’re probably testing the modelling in terms of what we have seen. I still think soft drinks offer great value for money, a great choice of products and great variety for a multitude of occasions, so I am pretty confident the category will stay resilient.” 

“From an elasticity perspective, it’s probably too early to say. Because we are coming out of a very inconsistent baseline with coming out of lockdown and hospitality recovering a year or so ago, just looking at year-on-year comparisons doesn’t paint a true picture. What I will say is that we haven’t seen anything outside of what we would expect at this point in time in terms of consumer behaviour.”