Restaurants may soon see an increase in soda prices as manufacturers pass along the cost pressures of a truck driver shortage and tariffs levied by the Trump administration.
The Coca-Cola Co. and its bottlers are already increasing the prices of carbonated beverages in North America, a “pretty unusual” move for the company to make midyear, CEO James Quincey revealed Wednesday on CNBC investment program “Squawk on the Street.” He tied the hike directly to the increased cost of aluminum and steel, the result of the stiff tariffs levied by the White House several months ago to give U.S. suppliers an edge in pricing, and “broad-based inflation out there.”
The latter issue, Quincey subsequently explained to investors, included an upsurge in freight costs, the result of shippers struggling to find truck drivers for interstate hauls. Many have dramatically increased the pay and benefits they offer prospective hires.
Quincey added that Coke expects customers to pass along the increases to consumers.
“The customer conversation is not a comfortable conversation, but they can see what’s happening,” he said during the CNBC program.
Similarly, PepsiCo told investors it expects increased pressure on margins for its North American beverage business in the second half of the year, a result in part of trucking fleets’ difficulties in recruiting younger drivers (the average age currently is 55). American Trucking Associations, a trade group for overland shippers, has estimated that 900,000 more drivers are needed to keep pace with demand, and the pool isn’t there. It warns that fleets will be short about 174,000 drivers by 2026.
The driver shortage and tariffs on steel and aluminum are also affecting products beyond soda. The beer industry has warned of a price hike since President Trump proposed a 25% surcharge on imported steel and a 10% levy on foreign aluminum early in the year. The Brewers Association says the tariffs will cost beer suppliers another $347 million annually. Analysts in that field expect the charges to be passed along to wholesalers such as restaurants, who will likely channel it down to their patrons.
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