President Trump’s tariffs on aluminum could make Coca-Cola even more expensive.
Coca-Cola CEO James Quincey said the company is importing aluminum for cans from Canada and is looking for ways to mitigate the price hikes brought by the new tariffs. Trump announced on Monday 25% tariff on steel and aluminum.
Quincey said that in the company’s revenue call, if the fees go into effect and aluminum cans become more expensive, the company cans can start selling more drinks in plastic bottles.
“It is related to our strategy on ensuring affordable prices and ensuring consumer demand, so if one package suffers from increased input costs, other ones that can compete in affordable spaces. We will continue to provide packaging,” Quincey said. “For example, if aluminum cans become more expensive, you can place more emphasis on PET (plastic) bottles.”
Quincy also said the impact of the new tariffs could be negligible.
“I think we are at risk of exaggerating the impact of a 25% increase in aluminum prices compared to the entire system,” he said in the company’s revenue call. “It’s not insignificant, but it doesn’t fundamentally change a multi-billion dollar US business. Packaging is just a small component of the total cost structure.”
Coke can also start sourcing aluminum domestically and raise consumer prices. Quincy noted that Coke already has a “hedge program” in place.
“As the relative prices of different materials and import sources change, we will of course consider adjusting mitigation, productivity, efficiency and where the materials are available. All of this will be what will happen in this way. “We’ll always go into the equation to manage it,” he said.
Trump’s aim to announce tariffs is to protect US manufacturing. “Our country needs to make steel and aluminum in the United States rather than in foreign land. It needs to be created to protect the future revival of US manufacturing and production.
Aluminum is generally recyclable and is cheaper than plastic. Coke fired fire to produce disposable plastics and reduced its sustainability target late last year. The beverage giant is currently aiming to use 35% to 40% of recycled materials in packaging by 2035, and is being revised from an initial target of 50%.
