Some of Australia’s most iconic beverage brands, including 157-year old Queensland soft drink Kirks, together with Mount Franklin and Deep Spring bottled water, have been sold to US giant Coca-Cola with the bottler also ratcheting up prices in Australia to deal with inflationary pressure and disrupted supply chains.
The local Coca-Cola operator has also decided cut out 30 per cent of its range, with some pack sizes for popular brands like Kirks discontinued and likely never to return.
London-based beverage conglomerate Coca-Cola Europacific Partners has offload the Australian drink brands less than a year after splashing out $10bn for ASX-listed Coca-Cola Amatil, which owned them.
The bottler has revealed it lifted Australian soft drink prices by up to 5 per cent this month.
And as it struggles with a fragile supply chain and rising input costs, such as packaging, pallets and even a shortage of carbon dioxide, a decision was made to up prices for the flagship Coca-Cola brand in Australia and other fizzy drinks in its broad beverages portfolio.
Some pack sizes to get the chop include select 24-can packs in sold in flat, shrink-wrapped slabs, which will be replaced by a move to a new fully packaged version, and the deletion of 200ml cans of soft drink for some brands and a shift to 250ml cans. In terms of dropped flavours within bottled water brands, some flavoured water sold under the Mount Franklin Lightly Sparkled label will also cease production.
Meanwhile, it is the end of an era for the Australian ownership of Kirks, known for its range of creamy soda, lemon squash, sarsaparilla and ginger beer, and that was founded in Queensland in 1865.
It soon will be sitting in the trophy cabinet of the $US263bn ($A365bn) US parent, The Coca Cola Company of Atlanta, along with the Mount Franklin brand, the biggest bottled water business in the country.
In a complete overhaul of the Australian bottling operations of Coca-Cola – which last year under its former corporate identity of Coca-Cola Amatil was sold to a London-based beverage conglomerate Coca-Cola Europacific Partners – a deal has been struck to sell Kirks, Mount Franklin, Deep Spring, Bisleri Chinotto and Fruitbox. The portfolio of Australian brands will be sold back to the US parent for $275m. The brands will continue to be bottled and sold in Australia but will no longer be Australian owned.
Peter West, the general manager for Coca-Cola Europacific’s operations in the Asia Pacific, said an agreement had been reached with the Coke parent in Atlanta to sell the Australian portfolio of soft drinks to it with the sale to be wrapped up by the end of June.
“Those products will continue to be made by us, sold by us, so the majority of our company wouldn’t see the difference its just that we wouldn’t own it (the brands).”
On top of that the local bottler had decided to discontinue around 30 per cent of its product lines in Australia to deal with the pressures on its supply chains, suppliers and work force caused by the pandemic.
“The key one that we’ve tried to, to manage is how do we keep the business very simple and focused over the next 12 months recognising the fragility of supply, so we’re probably going into this year with 30 per cent less SKU’s (stock keeping units) than what we had last year.
“And we’re doing that to free up the capacity and responsiveness of our supply chain. We also need the efficiency of that to come through in our factories and our performance.
“So some of some of the supply chain efficiencies that we are driving are probably some of the best that we’ve seen, but we’re doing it with a more focused portfolio.”
Mr West said some these brands discontinued would be in the Kirks range
“We might had some state-based ranges for Kirk’s or we would have some glass ranges that were in certain formats that we’re not doing. Anything that’s got great rate of sale, it’s growing, wide distribution, then it’s kept in range.
“Declining, not generating the returns for our customers then we just made those decisions to (discontinue) and that‘s probably not an ongoing exercise but I think with the fragility of supply it just requires that more than ever.”
It came as Coca-Cola Europacific reported that sales for its bottling operations in Australia rose 11 per cent for the full-year led by strong sales for Coca-Cola No Sugar, which gained market share, and its energy drink range.
There had also been price rises as the Coca-Cola bottler dealt with inflationary pressures.
“Because of the changes in global commodities, we have taken a price rise to the market in February. And it sort of varies across the range but it‘s somewhere between 3 to 5 per cent as a guide.
“And I think it‘s not so much the challenge of the commodity. It’s more to do with supply fragility, so we were managing an impact because of staff absenteeism through omicron.
“If you were looking at suppliers, they had somewhere between 15 to 20 per cent absenteeism. So the key challenge is more supply fragility for us to manage.”
Mr West said the price increases covered the flagship Coke brand and as yet it was too early to tell if that had led to a drop in sales volumes although sales were holding up well so far.
Extracted from The Australian