CCA continues to innovate amidst ‘cola wars’

Discussing the first half results to July 3, 2015,  in October’s Shareholder News, Coca-Cola Amatil’s (CCA) “the Australian beverage business delivered an increase in both volume and trading revenue. This increase was driven by investment in pricing, brand building, innovation and route-to-market improvements.”

The company’s investment in pricing is evident in its use of ‘deep discounting’. After price discounting on Coca-Cola and Pepsi beverages during the September quarter was led by CCA’s ‘deep discounting’ of Coke, which saw the prices of the cola giant fall by 7.7%, Deutsche Bank’s supermarket pricing survey has predicted that the ‘cola wars’ should continue to keep prices down during summer. According to the Sydney Morning Herald, Deutsche Banks’ research showed that the latest discounting by CCA meant Coke was momentarily cheaper than Pepsi for a short period during September.

The move followed price discounting of Coca-Cola products across the market in the June quarter and early July, as well as the introduction of 250ml cans, which CCA mandated were to be sold at no more than two dollars per can.

Although there were some initial concerns from retailers about the mandated maximum price set by CCA, retailer uptake ended up exceeding the company’s expectation.

Talking about this example of successful innovation in the October 2015 Shareholder News, CCA said “we will introduce even more smaller portion packs aimed at increasing affordability and meeting the desire for smaller servings while providing greater differentiation of packages across the channels.” Further innovation will “continue in the second half particularly in the water and sports categories as we look to capture value share and continue to accelerate our Zico coconut water and Barista Bros brands.”

Brand building has also been strong, with a number of campaigns launched by CCA in recent months. The company looks set to continue prioritising pricing, product innovation and brand building through 2017.

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