Coke and Pepsi leap in price

For more than two decades one dirham will have got you a can of Coca-Col – not anymore as the soft drinks giant raises its prices to Dh1.50.

Coca-Cola is raising the price of its products in the UAE for the first time in more than 20 years, by 50 per cent, but the drinks giant is confident it will not hamper its sales.

Antoine Tayyar, the public affairs director for Coca-Cola in the Middle East, said a can or glass bottle of the company's beverage now costs Dh1.50 (40 US cents), up fromDh1, and the price of a 2.25-litre plastic bottle will rise from Dh4 to Dh5. A 24-pack will now cost Dh36, he added.

He does not expect the higher price, which came into effect on January 1, to make customers think twice.

"From experience in several other markets, consumers continued to drink and enjoy our products. For more than 20 years, Coca-Cola products were sold for the same price; there are no other consumer products which kept the same price for more than two decades."

Pepsi is also raising its prices in the UAE, by a similar margin. Both companies applied to the Ministry of Economy to raise prices based on factors including inflation, rising petrol and salary costs, and the steep rise in sugar prices.

Sugar has risen to 30-year highs, most recently propelled by the flooding in Australia, the world's third-biggest exporter of the sweetener.

Sugar number 11 rose to 32.82 cents a pound, up 2.1 per cent, on the Chicago Board of Trade yesterday, according to Bloomberg.

Coca-cola has received approval for price rises in some other GCC markets in recent years, such as Saudi Arabia and Qatar, but the UAE Ministry of Economy gave its approval at the end of last year.

"It is something we had to do," said Tarek el Sakka, the general manager of Dubai Refreshments, which sells Pepsi products in the UAE. "We don't like to increase the price, but given the cost pressure, we had no alternative."

Some retailers say the jump in price will have a lasting impact.

"It's a 50 per cent increase," said Arif Shaikh, a director with the Bahraini company Retail Arabia, which runs Geant supermarkets in the UAE. "People are used to buying six, 12-packs, 24 packs. Now they will think twice."