Behaviour shift fails to dent Amatil’s sales

Posted by Daniel Palmer on 22nd May 2009

Coca-Cola Amatil have reported strong growth in the first half despite a “noticeable shift” in consumer behaviour.

Australia’s largest soft drink beverage maker advised, in their May trading update, that a hot summer had driven strong demand in the first quarter, while the stimulus packages helped them achieve strong volume and revenue growth.

“The economic downturn has resulted in a noticeable shift in consumer behaviour,” the maker of Coca-Cola in Australia said. “Demand for beverages in restaurants and cafes has slowed, but this has been more than balanced by the increased sales in quick-service restaurants and for take-home products in the grocery channel. The increase in at-home consumption has fully offset the reduced demand at on-premise outlets.”

Glacéau vitaminwater and Mother energy had been two highlights in the first half, the company said, with Glacéau becoming the number one functional water in the grocery sector and Mother claiming equal top spot amongst energy drinks in the grocery channel.

Amatil noted that pricing competition had been heightened by takeovers in the sector but said they had managed to still grow value share in spite of the pressure.

“There has been significant disruption in the Australian beverage market landscape as a result of the recent ownership changes of competitor beverage companies,” they reported. “Despite higher discounting by competitors over this period, CCA increased its value market share across all major channels, with particularly strong growth in the convenience & leisure channel.”

Their Food & Services division – SPC Ardmona – recorded “good volume growth” in Australia in all major categories – fruit, fruit snacks, baked beans & spaghetti, tomatoes and spreads. New product launches as well as a weaker Australian dollar relative to the prior period contributed to the improvement of the division as their goods became more competitive in the export market and better placed to compete against cheap imported home brands in the domestic market.

Whilst the severe drought in the Goulburn Valley continues to impact the domestic business, SPCA continues to expand its international sales in key northern hemisphere markets through various established joint venture fruit supply agreements. SPC Nature’s Finest is now the number one Brand in plastic packaged fruit in the United Kingdom.
SPCA’s ‘Goulburn Valley’ brand has also achieved major success in fruit juice and fresh flavoured milk and is now a $70 million beverage brand in only three years.

Their beer joint venture with SAB Miller, Pacific Beverages, is continuing to “grow its share of the Australian premium beer market”, the company added, with premium beer volumes increasing by more than 50% in the year-to-date – driven by increased ranging and the successful launch of Peroni Leggera in March.

“Given the external environment, I am very pleased with how the business is tracking against its key priorities of new product and new customer expansion,” CCA’s Group Managing Director, Terry Davis. “The material lift in CCA’s service levels has been rewarded by increased business from our customers and strong consumer demand for our market leading brands during this very volatile period.”

“I would expect that the lower mortgage interest rates, July income tax cuts and continued low petrol prices are all likely to have a positive impact on consumer discretionary spending and, as a result, on CCA’s second half trading. However, this has to be weighed against the offsetting impact of a decline in consumer sentiment and the forecast increase in unemployment over the next six to twelve months.”