Coca-Cola Amatil (CCA) has reported what it describes as a ‘solid’ result for the first half of the year, with earnings before interest and tax (EBIT) up 3.2 per cent to $326.9 million.
This reflected a strong performance in Indonesia and PNG, where EBIT grew 65.2 per cent, and a 33.6 per cent EBIT growth in alcohol and coffee. In New Zealand and Fiji EBIT growth of 5.4 per cent was achieved.
However CCA reported a 1.9 per cent decline in Australian beverages due to its continuing focus to rebalance the portfolio.
Structural adjustments in the Australian beverages market saw revenue decline with a 1.5 per cent reduction in volume and 2.2 per cent lower revenue per unit case.
These downward trends reflected pressure in the channel mix and a shift in category mix from sparkling to still, driven by water.
A change in channel mix was noted by the beverage giant, with the grocery channel performing positively while pressure in the national account and state operational (including petrol, convenience and route) accounts continued.
Still beverages’ strong performance led by bottled water
Revenue in Australian beverages decreased by 3.6 per cent. Still beverages – particularly water – delivered a strong performance while progress was made in addressing the consumer proposition in sparkling, with a focus on portion size and product reformulations.
“Our stills volumes are up 9.3 per cent, driven by water, but we are also getting gains across the board in energy, dairy and sports,” Barry O’Connell, MD of CCA, told C&I Week.
“We are rebalancing our portfolio at a rapid rate driven by our innovation in packaging, pricing and new product innovation,” Mr O’Connell said.
Water, led by the company’s Mt Franklin brand, performed strongly on the back of new packaging, product innovation and increased media spend.
However, in P&C the company experienced some challenges in the water category understood to be as a result of aggressive competitor price competition. The sports category was also impacted by competitor discounting.
CCA said ice tea brand FUZE Tea, launched earlier this year, exceeded initial distribution targets but was also impacted by aggressive competitor pricing.
“FUZE is performing well across channels, in terms of pricing we are remaining competitive. It’s a premium proposition and is significantly less in terms of kilojoules than our main competitor and we think that is particularly important,” Mr O’Connell said.
Innovation to continue in dairy
CCA’s ice coffee brand Barista Bros achieved strong double-digit volume growth and continues to perform strongly, according to the company.
“Over the next six months we will be innovating in terms of pack sizes and we are looking at further dairy innovation over the next 12 to 18 months. There is a lot of NPD in dairy in our plans,” Mr O’Connell said.
Declines in sparkling beverages – particularly cola – were noted, with some of the decline being attributed to cycling of the Coca-Cola Life launch.
The company’s changed approach to business development contributed positively to earnings with around 3800 new outlets being supplied.
Online ordering increased from 27 per cent in the first half of 2015 to 34 per cent of orders in the first half of 2016.