Coca-Cola Amatil’s (CCA) has recorded a net profit of $393.4 million, up 4.8 per cent on last year, with earnings in its core Australian Beverages business stabilising after several years of decline.
Speaking at the presentation of the company’s 2015 financial results CCA group managing director, Alison Watkins said the company’s 2015 result is consistent with its plans and the guidance provided in 2014.
“We are delivering on our strategy of strengthening our category leadership, making a step change in our productivity and in-market execution, and building better alignment with The Coca-Cola Company and our other partners.”
Coca-Cola Amatil’s Australian Beverages business delivered a slight increase in overall volumes, recording a lift of 0.2 per cent to $464 million, driven by ongoing promotional investment and product innovation. The beverage giant said it was also ahead of schedule with a three year $100 million cost savings plan within the division.
Moderate gains were delivered across a number of brands including Coca-Cola, Sprite, Kirks and Fanta, particularly in the grocery channel. Single serve grew by 1.5 per cent across the Sparkling Beverages portfolio with active category management, pack and channel mix, together with investment in pricing tools and improved promotional pricing strategies contributing to a volume increase.
Ms Watkins said the group also benefited from new product launches and continuation of a number of marketing campaigns including the 100 year celebration of the iconic Coca-Cola contour bottle, ‘Colour Your Summer’, the ‘Come Alive’ campaign featuring thermochromatic cans and the ‘Sprite Cut Though the Heat’ marketing campaign.
The much anticipated launch of Coca-Cola Life, a reduced sugar beverage that uses natural sweeteners, achieved sales volumes of 1-2 per cent of total Coca-Cola volumes, in line with the company’s expectations.
Downward price pressure in the water category continued and volume growth was primarily driven by low cost private label and value water brands. However enhanced water drove around two-thirds of the total growth in the water category, representing approximately 35 per cent of value in the grocery channel, up from 28 per cent in 2014.
A permanent value water brand, Peats Ridge, was introduced in June, while Mt Franklin was repositioned with new packaging and a new campaign, ‘The Nation’s Hydration’, and increased its market share in the premium spring water segment within the grocery channel.
The company’s coconut water brand, Zico, saw continued sales increases and is competing to be the number two player in the high value coconut water segment, with the product now holding 15 per cent market share.
Competitive pricing resulted in a loss of share for Powerade, however, the company responded with the launch of a new product formulation ‘ION4’ in October and regained market share and value growth in the fourth quarter.
In the dairy category, sales of Barista Bros flavoured milk products continued to grow as a result of increased distribution momentum, increasing sales velocity and the addition of a new product, ‘Double Expresso’, to the range. Within the national convenience and petroleum channel, Barista Bros achieved 6 per cent share of the flavoured milk segment in the fourth quarter.
“We expect the turnaround of the Australian Beverages business to be gradual, fuelled by strong category and brand programmes in 2016 and a continued focus on revenue growth management, route to market and cost savings. This is assisting us to create a platform to become a more lean and agile organisation for the future, fully capable of anticipating and responding to market opportunities,” Ms Watkins said.