Coca-Cola Amatil‘s plans to put the fizz back into Coke in Australia

CLASSIC Coke sales continue to fall in Australia but the firm has a plan — kebab shops. A cut-off date for Coke Zero has also been finalised and Coke Life will get another chance.
Benedict Brook
AUGUST 22, 2018
news.com.au
THE boss of Coca-Cola Amatil, which bottles the iconic beverage brand in Australia, has said the company had “lessons” to learn if it is put some fizz back into its soft drinks sales.
The days of the bottle of classic Coke in every fridge across Australia were likely now gone. Talking to news.com.au, the firm’s chief executive officer Alison Watkins said households were moving towards lower-sugar alternatives or away from cola altogether.
But all was not lost. A strategy in New Zealand has helped bring some sparkle to Coke sales. And it involves kebab shops.
Ms Watkins also revealed a date by which the last can of Coke Zero would be sold and hinted that the company would give the green canned Coke Life yet another shot at success in what would be the variant’s third launch.
On Wednesday, Coca-Cola Amatil (CCA), which is 30 per cent owned by the US’ Coca-Cola Company, reported its underlying half year net profit had come in at $178.8 million, down 6 per cent.
As well as bottling and selling Coke across the Pacific, CCA also produces Mount Franklin and Pump waters, Barista Brothers iced coffee, Mother and Monster energy drinks, SPC tinned fruit and veg and distributes Teacher’s scotch and Coors beer.
The company said today it would review its Shepparton based SPC business which could lead to a sale but Ms Watkins said there were no plans to close the plant down.
COKE SALES
When it came to its core drinks business, it was a very different story for CCA depending on what side of the Ditch its customers were on.
In New Zealand, the volume of product sold grew by 7.9 per cent. Yet, volume at its Australian beverages unit slipped by 0.3 per cent, and by 0.5 per cent when you drill it down to just fizzy drinks. Although, as Ms Watkins pointed out, this is better than the 3.8 per cent drop this time last year.
“Our priority has been Australian beverages. It’s about 60 per cent of our profits so it’s very, very important and were pleased that the early signs are encouraging that it’s getting some traction.”
KIWIS, COKE AND KEBAB SHOPS
But given the similarity between the two nations, what is Coke doing right in New Zealand, where sales are edging up, that it’s failing at in Australia?
“There’s much more in common than there are differences between New Zealand and Australia,” Ms Watkins said, admitting the disparity between the two countries had been perplexing.
But CCA reckons they’ve worked it out as being “continued pressure in immediate consumption” channels.
Ms Watkins broke the company jargon down: “Immediate consumption refers to our traditional customers. So it might be a bakery, newsagent, or hamburger or kebab shop. Our New Zealand experience shows us that we can help that customer to grow and prosper.”
Here, the company had been focused on cultivating big brands, like Hungry Jacks, or mending its fractious relationship with big retailer Woolworths — who, for a time, refused to stock Coke No Sugar.
CCA had neglected the needs of smaller retailers pushing an unwieldy range of drinks on them, some that just didn’t sell.
That was now going to change, said Ms Watkins.
“In a bakery we need to have a good dairy-led offer, but in a kebab shop it’s all about brand Coke and water. We need to make sure we have the right offer for the right customer.
“We’re making gains in coffee shops which are a fast-growing segment and where we tended to be a little weaker,” she said.
“There are lot of lessons in New Zealand that we make sure are translating here in Australia.”
COKE LIFE COMEBACK
But, away from kebab shops, full fat classic Coke is going through a bigger crisis as tastes change and waistlines widen.
The company declined to pull out the sales figures of classic Coke alone, but the fizzy drink category is under pressure as people turn to water and juices.
“Brand Coca-Cola is incredibly strong but it is changing. Some customers might pick up classic all the time, or now and again, and some customers are not picking up Coke at all and are picking up Coke No Sugar instead and that’s really driving the growth for us.”
Introducing smaller cans, new flavours and retro glass bottles were all attempts to get consumers excited about Coke again.
However, a struggling Coke variant could be about to get yet another lease of life, Ms Watkins said. Coke with Stevia, nee Coke Life, had been one of the dampest of squibs by Coca-Cola for many years. Hoping to find fans by using the natural sweetener stevia, its green cans turned off shoppers. It was axed in the UK last year after it slumped to less than 1 per cent of the country’s total Coca-Cola brand sales.
You can barely find it in stores in Australia, but CCA isn’t giving up on it and has hinted it’s prepared to give the brand a third go. Again, it’s an idea emanating from New Zealand. But there’s two big changes — it will now be a variant of Coke No Sugar and the pea green cans will be gone, replaced with familiar Coke red.
ZERO END DATE
“We’ve just launched a new Coke No Sugar with stevia in New Zealand and it’s a world first.
“When Coke with Stevia launched here it still had two-thirds the amount of calories; now we’ve progressively reduced that formulation to the product they now have.
“We’ll take learnings from New Zealand and if it makes sense here in Australia, we’ll introduce it.”
Ms Watkins said the company’s slow removal of Coke Zero in favour of Coke No Sugar continued. Earlier this year, she said the company needed to “invest in the consumer to get them to understand No Sugar properly.”
Well, the clock is ticking on that understanding as she has now called zero hour on Zero.
“By the end of this year we will have phased it out,” she said.
Ms Watkins insisted the introduction of Coke No Sugar was, finally, going down well with customers.
“The positive thing for us the formulation of Coke No Sugar means it is indistinguishable from Coca-Cola so those people wanting to cut down on sugar now have something that is for them.”
benedict.brook@news.com.au