Coca-Cola Amatil has announced it will be lowering the prices of beverages outside its core fizzy drinks range. This comes as part of a $40 million initiative to revive sales as it tries to meet its profit promise to shareholders, despite a below average start to the year.
On Wednesday, the company vowed to put money into marketing, execution and equipment, such as cafe and restaurant fridges.
Coca-Cola Amatil (CCA) group chief financial officer Martyn Roberts, said cutting the cost of products outside the fizzy drink range should help grow the company’s market share. Growth in this area is essential, as consumers are becoming increasingly sugar conscious.
“We’re probably overweight in sparkling beverages, which has been declining slightly, and underweight in some of those categories that we really want to accelerate our investment in,” Mr Roberts said.
“Areas like dairy, areas like tea, areas like juice where we need to be more competitive is where we really want to target those price investments.”
Non-fizzy drinks which CCA sells include FUZE iced tea, Barista Bros iced coffee and Minute Maid juice, as well as a range of bottled water and alcohol products.
The company, which is listed on the ASX, but 31% owned by The Coca-Cola Company and has the licence to sell its products in Australia, Indonesia and the Pacific islands, saw earnings in the domestic business fall 13% compared to the same period a year earlier.
Earnings decreased by 4.3% to $312 million and net profit dropped by 4.1% to $190 million.
Mr Roberts said its Australian performance improved in the second half.
“But we still want to go harder, and that’s why we’re accelerating our investment in the Australian business so we can continue to improve it,” he said.
Group managing director Alison Watkins has stated that a $40 million investment to accelerate growth in Australian beverages will take a toll on earnings in 2018.
“Despite these impacts, we remain committed to our target of mid-single digit earnings growth per share in the medium term,” chief executive Alison Watkins said.
“We are very excited to be unveiling a revolutionary new system that will bring café-quality coffee to the homes of Indonesians, in a single touch,” Ms Watkins said.
Currently CCA’s shares have fallen 25% to $7.98 since April.
