Coca-Cola Amatil profits out of “distraction” to main competitors
Coca-Cola Amatil has announced they are on track to meet profit guidance and may have found the right energy drink to compete with V and Red Bull, with sales of Mother surpassing expectations.
“Notwithstanding the volatile market conditions, CCA has experienced solid trading in the third quarter,” a statement from the company advised. “The Australian beverages business has cycled very strong volume growth in Q3 2007 and delivered performance in line with expectations. The Australian business continues to expect to deliver high single digit earnings growth in the second half.”
The very strong third quarter was assisted by the “distraction” to major competitors Cadbury Schweppes and Frucor, according to MD Terry Davis. Danone, the owner of Frucor, and Cadbury are undertaking reviews of their beverage operations with speculation still strong that both companies could be put on the market. Coca-Cola Amatil has been among a host of companies linked to a takeover of the two companies.
Mother, the energy drink CCA re-launched earlier this year, has been the company’s most successful “new” product launch this year and has reportedly captured a 12.7% of the energy drink category in the grocery and convenience channels. This growth has been led at Coles, where it has a 28.7% share, and CCA believes the potential for further market share inroads are strong as it is due to be stocked at Woolworths outlets in the fourth quarter of 2007.
Coca-Cola has struggled for years to capture a share of the increasingly lucrative energy drink sector and credit the early success of this new product to the improved taste, innovative relaunch activity and larger pack size.
SPC Ardmona, CCA’s fruit and vegetable processor, continued to face challenges presented by the ongoing drought, with the company reporting that the restructure is on track.
“The rationalisation of the manufacturing facilities in the Goulburn Valley is on target for completion in November and there is a high level of certainty that the forecast savings of $8-10 million per annum from efficiencies and cost savings will be realised from the beginning of 2009.”
Pacific Beverages returned strong beer sales for CCA, with year to date beer sales revenue growing by more than 150%. The momentum of the Peroni and Miller brands drove the increase, with sales growth of the imported premium beer brands again exceeding 100%.
Coca-Cola Amatil will be focussing on new product development to drive category expansion, including Energy & Flavoured Milk, as part of their growth strategy for 2009. The acceleration of their Cold Drink Equipment Investment is also slated as a key goal for 2009, as is the focus on fueling the growth momentum of their alcoholic beverage business.