Beverage companies across the world are increasing prices to deal with inflation, as high input costs remain a critical challenge for many.

The extent to which companies have raised prices varies by brand, beverage segment, geography, and more, but the situation remains quite fluid. Inflation will continue to create challenges for beverage companies in 2023.

“Even barring the economic slowdown that many economists predict, the hedges that have protected beverage companies from input cost inflation have run out, and the savings that many consumers used as a buffer have been drawn down below pre-pandemic levels,” says Steve Rannekleiv, global strategist – beverages at Rabobank.

Many economists are predicting an economic slowdown, if not an official recession, in the coming year. But even without a slowdown, consumer spending patterns of 2022 may be difficult to sustain in 2023.

Financial cushions (savings) built up during COVID helped consumers manage through the initial hit from inflation. But savings are being drawn down, and real wage growth (corrected for inflation) has turned negative in some markets.

According to Rabobank’s latest report, in 2023, beverage companies will be forced to navigate far more volatility than usual, and the dramatic rise in input costs will continue to pressure margins.

Inflation is leading consumers to make pronounced changes in their choice of products, brands, and channels in order to make ends meet. Moves by competitors are having an outsized impact on sales.

“These dynamics and more will shape the outlook for beverage companies in the coming year,” says Rannekleiv.

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