Strong growth from the Coca-Cola No Sugar product and a cutback on the number of discounts and promotions meant the Australasian business of the soft drinks group delivered its strongest sales performance in years during the June half.
The former Coca-Cola Amatil business, acquired by Coca-Cola Europacific Partners in a $9.8 billion buyout in April last year, has been a standout performer for its parent.
Coca-Cola Europacific Partners reported its financial results late last week, and chief executive Damian Gammell was glowing about the headway the Australasian and Indonesian operations were making. The buyout ended a 51-year stint for Coca-Cola Amatil on the stock exchange in Australia after its shareholders overwhelmingly voted in favour of the $13.50 a share offer.
Sales revenue for the API division, encompassing Australia, Pacific and Indonesia, climbed by 15 per cent to €1.829 billion ($2.68 billion) for the six months ended July 1.
Mr Gammell said Coca-Cola No Sugar had outperformed the market in Australia, while the group’s “biggest ever Ramadan activation in Indonesia” drove the June half sparkling beverage volumes ahead of 2019 levels, before the pandemic disrupted markets.
The company had made a concerted effort to reduce discounting and promotions in Australia.
“We have already made good progress in reducing the depth of our promotional support in Australia, with little impact on volumes,” Mr Gammell said.
He told investors that the Australian operations were also benefiting from a re-opening of the economy after restrictions and lockdowns curbed growth in hospitality venues the previous year.
“We’re benefiting clearly with COVID restrictions easing and people going back out and eating and drinking, it is a big part of the lifestyle down there, outside”.
The company had been cutting discounts on multipack cans in Europe for the past four or five years.
“We’ve done the same now in Australia,” he said. In the June quarter, overall sales for the API division were even higher at 17 per cent to €925 million.
Coca-Cola Europacific Partners, which operates across 29 countries, expects inflation across its business to be at its peak later in calendar 2022, before falling in 2023.
It expects “high-teen” commodity inflation for the rest of 2022, dropping to high single-digit commodity inflation in 2023.
The company in its presentation to investors lauded the timing of the Coca-Cola Amatil acquisition, saying it was a “great deal at the right time”.
Volumes, revenue and operating profit were all ahead of the levels of 2019. The benefits of combining the former Coca-Cola Amatil business into the broader group were “slightly ahead of schedule”. Plans were being advanced for further value creation in conjunction with The Coca-Cola Company from the United States.
The group’s Monster energy drink had continued to grow in all markets in the June half.
A string of large US consumer goods brands have been raising prices to try to claw back some rising input costs as raw materials and packaging costs jump. Coca-Cola in late July in the US said prices of its products had risen about 5 per cent.
Extracted from AFR