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Pepsi swaps 12-packs for eight-packs in Florida

By Mark Albright, Times Staff Writer
In print: Tuesday, October 7, 2008

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Is the 12-pack of soda the next victim of rising food prices and more frugal times?

Pepsi Bottling Group aims to find out in a Florida test kicked off this week that replaces the most popular way of buying soft drinks with an eight-pack.

Closely watched and expected to be copied elsewhere by Coca-Cola, the test is the latest from foodmakers who in the past year rejiggered almost half of all package sizes or reformulated ingredients to mask higher prices.

With the Department of Agriculture forecasting food prices will jump 6 percent this year, the job is far from over. Even as commodity prices begin to stabilize, manufacturers are coping with higher energy prices such as gas for delivery, electric bills and oil-based plastic. In fact, Pepsi launched the test in 20 percent of the country in anticipation its eight-packs will seem like more of a value as prices keep rising.

Pepsi's prices have not gone up as fast as the company's 11 percent spike in expenses. Meanwhile, U.S. can sales volume slumped 6 percent as people buy fewer soft drinks and bottled water or shift to off brands.

Want proof the 12-pack — which accounts for half of all soft drink sales — outlived its appeal? Even when Pepsi cut prices, sales volume was only half what it used to be, spokesman Jeff Dahncke said.

"The industry overused the 12-pack," said John Sicher, publisher of Beverage Digest, a trade publication. "This is just the start of a variety of new soft drink configurations you'll see tested."

The tests cross the entire Pepsi line, including Mountain Dew, Sierra Mist and Lipton Brisk. Next up are tests contracting 2-liter bottles to 1.5 and replacing 20-ounce bottles sold in convenience stores with 12-ounce plastic bottles and 16-ounce cans.

In supermarkets, brand-name 12-packs of cans typically go for $4.50 to $5. On frequent weekly specials, they plummet to $3. Shrinking the package by a third drops the regular price to $3.33 and to $2 to $ 2.50 for eight cans on special.

"In today's economic environment, entry-point prices are critical," said Eric Foss, Pepsi chief executive.

On a per-ounce basis, the price increase is a fraction of a penny. By the quart, the spread gets wider. In ditching the 12-pack, Pepsi also debuted an 18-pack that undercuts the eight-pack price from $1 to 74 cents a quart at Sweetbay Supermarket.

Why an 18-pack? Some time ago, Coke cut its case to 20 cans and it costs a buck more. Or at least it did until it cut prices this week, no doubt to counter Pepsi's moves.

In short, price hawks may need a pocket calculator.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.