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Double, double toil and trouble: Pepsi pops its top with pseudo-super-revenues

Double, double toil and trouble: Pepsi pops its top with pseudo-super-revenues

Cynical Kipp is hesistant to applaud Dubai Refreshments recent reports of more than a 100 percent increase in profits.

July 4, 2011 1:28 by

Yipee! Hip hip horray! Dubai Refreshments has managed to double its profits!

Yes, it is true, Dubai Refreshments, the official bottler and distributor of Pepsi, 7UP, Mountain Dew and Mirinda in the UAE has reported a profit of Dh61.1 million in the first six months of this year; that is more than 109 percent increase from the Dh29.2 million profits reported for the same period last year.

Well given the gloomy economic weather, surely Dubai Refreshments has a lot to teach us about cutting costs and turning losses into profits. So what did the company do? Did they invest in some much needed “right sizing” or “outsourcing”?

What, neither?

Oh yes, that’s right Dubai Refreshments increased their prices for the first time in 20 years just before the start of this year. A can of Pepsi, which used to cost Dh1, now costs 50 percent more, at Dh 1.50. Hmm, why is it that Kipp finds it very difficult indeed to herald Dubai Refreshment’s doubling of profit when it comes after the company passed a 50 percent increase to its products?

Of course when news of the increment emerged, Dubai Refreshments cited the rise of prices of resources—although the successive 25 percent drop in food prices as per the UN’s food index following January, were not reflected in the soft drink’s price structure.

As The National so keenly notes, “The increase in price and a reduction in costs helped boost Dubai Refreshment’s profits by 109 per cent to Dh61.1m in the first six months of this year, up from Dh29.2m in the same period last year.”

And if you would’ve thought consumers would have resented the price hike, the fact of the matter remains it was one they were willing to overlook, as you’d well imagine. As Sana Toukan, the research manager in the Middle East for Euromonitor International told the National “Demand recovered quickly due to strong loyalty for both brands and the lack of similar alternatives.”
Hmm, so the public is insanely loyal, there aren’t any other drinks to match the kind of reputation Pepsi has built and the company has increased prices by 50 percent. Should we really be too glad or surprised that all this comes with over a 100 percent boost to their profits?

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