Cola wars? Coca-Cola prices dropping in supermarkets

Patrick Hatch
July 15, 2015
The Age
Cheap soft drink prices at Australian supermarkets could be set to continue, as Coca-Cola slashes prices to help its new product Coke Life gain traction, a new report suggests.
Deutsche Bank’s latest supermarket inflation survey, released on Tuesday, shows the overall price of soft drinks was abnormally low during the June quarter, down 7 per cent compared to the same time last year.
Coca-Cola Amatil drove this price dive, the report says, with its products down a full 11 per cent for the period, while Schweppes’ products dropped by 2.5 per cent.
The report points out the price battle coincided with the April launch of Coke Life, a mid-calorie drink sweetened with sugar and stevia, which was accompanied by discounts of Coca Cola’s new and existing products.
“We expect Amatil saw strong volumes during the promotional period, offset by the sharp decrease in prices,” the report says.
The price drop was so significant that Coca-Cola products became only 20 per cent more expensive than rival Pepsi in May, compared to a long run average of being 40 per cent more expensive.
Deutsche Bank recorded prices creeping upwards during the last weeks of June, but then observed some of the heaviest promotions they had ever seen at the start of July, with two litre bottles of Coke selling for less than $2.
Coke Life has had a difficult launch, with Credit Suisse analysts estimating in May that the soft drink giant sold 7 million litres of the new drink over five weeks, compared to 15 million litres of Coke Vanilla during the same period of its launch in 2005.
“Repeat purchases of Coke Life are probably short of expectations at this early stage,” analysts wrote in a note to clients.
However Coca-Cola Amatil rejected the claims at the time, and did so again on Tuesday, saying the product was on track to meet expectations of accounting for 1 to 2 per cent of Coke sales, in line with its experience in the UK.
Barry O’Connell, head of CCA’s Australian non-alcoholic beverages business, told Fairfax Media that it was wrong to compare Coke Life with Zero or Vanilla, as the new drink was aimed specifically at “lapsed cola drinkers and low cola drinkers”.
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