CCA cider deal a winner in tougher times

  • December 13, 2012
  • Kate Carey

Coca-Cola Amatil (CCA) has announced an anticipated growth of 4-5 per cent growth in net profit for 2012, 2-3 per cent below what analysts had predicted.

Attributed to the “high Australian dollar” and “price-driven competitor activity”, Coca-Cola Amatil’s latest trading update report says the Company is confident the future remains positive, and confirms it will be entering a long-term agreement for the distribution of Rekorderlig cider.

Rekorderlig cider is produced in Sweden, but is the number one cider brand by value in Australia in the off-premises sector. Cider is now the fastest growing alcoholic beverage category in Australia, increasing by 20 per cent per annum and generating annual retail sales of over $550 million.

CCA will begin distribution of Rekorderlig in January 2014, following the expiry in December 2013 of a restraint agreement with SABmiller not to sell beer or cider.

Managing Director Australian Beverages, John Murphy said that the long-term agreement was positive progress in CCA’s alcoholic beverages strategy.

“CCA is the leading non-alcoholic beverages and spirits partner for the licenced trade and the future partnership with Rekorderlig will materially strengthen our brand portfolio in this important channel,” he said.

While CCA said that Indonesia and PNG will once again deliver a strong performance in all categories, the trading environment in Australia and New Zealand remains challenging. Overall, CCA was impacted by declining earnings growth of 2 per cent in the SPC Ardmona food business. CCA reported that “cheaper imports” and “retailer private label categories” were to blame for the decline.

Meanwhile, Managing Director, Terry Davis said that CCA had experienced a positive start to the Christmas trading period in Australia.

“While we still have an important two weeks of trading ahead of us, at this stage we expect to deliver positive volume and revenue growth for the second half,” Mr Davis said.

For 2012, CCA expects capital expenditure to be $450-460 million.

Acquisition of PT San Miguel Indonesia Food and Beverages Bottling Facility

CCA has acquired the PT San Miguel Indonesia Food and Beverages non-alcoholic beverage bottling assets in Jakarta, Indonesia following San Miguel’s decision to exit the production of non-alcoholic beverages in Jakarta.

Commissioned in 2006, the assets include a 20,000 sqm purpose built beverage production facility which includes a high speed PET bottling line and a 5,000 sqm warehouse. In addition, the 100,000 sqm land parcel acquired provides a valuable land bank for future expansion.

CCA’s Group Managing Director, Terry Davis said it was a very important acquisition.

“In addition to the site’s existing high-speed PET bottling line, we will install an additional carbonated soft drink PET line, increasing our Indonesian PET production capacity by 20% over the next 12 months,” Mr Davis said.

“The facility has the potential to add a further three beverage production lines which could increase Indonesian PET capacity by a further 35-40%, providing the business with an immediate low cost expansion option in the key densely populated West Java region of Indonesia,” he added.

CCA expects to spend approximately A$45 million on the acquisition of the existing San Miguel facilities and on expenditure to further develop site capacity over the next 12 months.

CCA is also currently completing the acquisition of an existing 18,000 sqm warehousing facility in Lae for A$28 million. The acquisition is expected to provide CCA with “much needed warehousing space to guarantee future expansion capacity.”

 

Coca-Cola Amatil will begin distributing Rekorderlig cider in January 2014.

 


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