The heat is on and consumers in western and north India better brace up

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to pay more for their cool treat. Soft-drink major Coca-Cola has hiked prices by up to five per cent in at least two major markets such as Maharashtra and Delhi.

This is the second price increase being done by the company in the last two months. In April, the firm that sells Thums Up, Sprite, Fanta and Maaza, had hiked prices of its aerated beverages by up to nine per cent due to surging packaging and transportation costs.

After the price hike, a 1.25-litre bottle of Thums Up is now available for Rs 39, up from Rs 37. Prices of 200 ml bottles of Sprite, Maaza and Limca are up by Rs 1 from Rs 9. The company has also increased prices of its two-litre bottles of Sprite and Thums Up to Rs 63 from Rs 60.

The Indian subsidiary of the US cola giant blames increase in the value added tax (VAT) levied by state governments of Maharashtra and Delhi for the price hikes. The state value-added tax (VAT) has increased to 20 per cent from 12.5 per cent earlier, said senior Coca-Cola India officials.

When contacted, a Coca-Cola spokesperson confirmed the development and said the firm had increased prices of select packs of all its carbonated beverages. “Rising VAT has forced our bottling partners to undertake marginal price increase on certain packs in Maharashtra. Providing consumers with choice and value continues to be the cornerstone of our business strategy,” said the spokesperson.

The cola majors have not seen any incremental sales over last year and their bottomlines were bleeding. In such a

scenario absorbing the VAT increase would be

difficult, said an industry expert.

With the cola majors failing to persuade the state government to roll back the VAT hike they may be forced to pass on the increase in costs to consumers. Coke seems to be taking advantage of its strong franchise to take the lead in this area, said another expert.

Coca-Cola has also been battling rising transportation costs as a result of the price hike in auto fuels like LPG, diesel and petrol. The cost of plastic polymers, which goes into making the transparent polyethylene terepthalate (PET) bottles, too, has been on an upswing.