Morocco: Coca-Cola’s new risky bet?

In an unexpected turn of events, the famous multinational Coca-Cola recently made a radical change in its pricing policy in Morocco, sending shockwaves through small traders in the country. The move, which saw the price of Coca-Cola products drop by one dirham overnight, has left many grocers in a difficult situation, juggling two stocks at different prices.

The price reduction, while seemingly minimal, has had a significant impact on Moroccan grocers, whose profit margins are already extremely thin. With a profit often not exceeding one dirham per unit sold, this sudden price fluctuation has highlighted the economic precariousness in which these small traders operate.

Several factors seem to have motivated Coca-Cola’s decision. On the one hand, the company is facing a boycott movement in Morocco, due to its alleged support for Israel in the Gaza conflict. On the other hand, increased competition in the soft drink market, with brands offering cheaper products and in larger quantities, has forced the American giant to review its pricing strategy.

Competition and boycott: a bitter cocktail for Coca-Cola

According to Amhamed Jouchi, president of the Agarass association of traders in the Marrakech region, this price drop is a direct response to the fierce competition Coca-Cola is facing. He points out that other brands now offer a liter and a half of the soft drink for 7.5 dirhams, while Coca-Cola previously sold a liter for 8 dirhams.

This situation reflects a broader shift in the consumption habits of Moroccan families. Faced with economic hardship, many are turning to less expensive options, undermining big brands like Coca-Cola. The ongoing boycott, linked to the company’s perceived support for Israel, only exacerbates this trend.

For grocers, this price fluctuation poses a logistical challenge. With limited inventory, they find themselves selling the first batch at the initial price, then quickly adjusting their prices for the second batch, often without notice. This makes it harder for them to manage and further reduces their already thin margins.

Despite the price cuts, Coca-Cola has not advertised the change, a move that Mr Jouchi calls a “positive.” But it does not lessen the impact on small retailers, whose profits are already negligible on some products.

The situation highlights a broader problem in Morocco’s retail sector. High operating costs, including electricity and labor, are weighing heavily on grocers, whose margins remain stable despite the general increase in prices. Mr. Jouchi calls for intervention by the relevant authorities to address this imbalance.

Coca-Cola’s new pricing policy applies to the whole of Morocco, with a reduction in the price per liter from 8.5 to 7.5 dirhams. However, this reduction does not translate into improved margins for retailers, who continue to struggle to maintain their activity in an increasingly difficult economic environment.

In conclusion, Coca-Cola’s decision to cut prices in Morocco, while potentially beneficial to consumers, highlights the challenges facing small retailers in a changing market. Between increased competition, boycotts and reduced margins, the future of traditional Moroccan grocery stores seems uncertain, calling for a broader reflection on the structure of retail in the country.

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