Rising Costs Weigh on China's Beverage Makers

China's beverage making industry has experienced a 10% rise in direct costs and could expect a sharper increase around March this year, Xiao Zhuqing, assistant to the chairman of Hainan Yedao Group Co, a leading Chinese maker of coconut juice, told the National Business Daily.

Beverage makers have been hit hard by burgeoning ingredient, packing, energy and labor costs, where raw material prices and packing prices have risen by 50% and 20% from a year earlier, according to the China Beverage Industry Association.

China's sugar price more than doubled to ¥7,000 per ton throughout the past year.

Master Kong, a famous soft drink brand, has raised the price for a carton of 15 bottles of juice or tea by ¥1 and a carton of 24 bottles of water by ¥0.5 in the wake of what it said was ballooning costs. Foreign brands like Coca-Cola and PepiCo also have marked up their price tags.

"March through September is the prime season for soft drink and liquor sales in China," noted Xiao of Hainan Yedao. "I reckon most of the beverage makers would employ 'hidden price hikes' to retain their market share, i.e. reduced weight for the same price."

$1 = ¥6.6