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CCA to accelerate investment in Indonesia

Coca-Cola Amatil (CCA) will accelerate investment in Indonesia and continue preparations for re-entry into the Australian beer market as competition hurts earnings from soft drinks in Australia.


CCA also intends to launch a new drink, Coke with lemon, later in 2013.

CCA on Tuesday reported a 12.3 per cent fall in net profit to $216 million for the six months to June 30, as it dropped prices to fight off a rival’s new product, Pepsi Next, in supermarkets and grocery stores.

Australian beverage earnings fell 10.1 per cent as CCA moved to protect its market share.

Also, competition from cheaper imported products had continued to hurt CCA’s SPC Ardmona processed fruit and vegetable business, and a slowdown in the mining sector and higher unemployment had affected demand for products in Papua New Guinea.

CCA expects the overall group’s full-year earnings to fall up to four per cent on the prior year, before one-off items, after competitor price discounting stepped up in July and August.

“While the Australian non-grocery business continues to perform well, the trading conditions in the grocery channel continue to be challenging,” CCA group managing director Terry Davis said.

But CCA’s business in Indonesia was surging, with volumes and earnings growing 15 per cent as CCA rolled out more cold drink coolers and new products.

“Looking forward, we remain very positive about the prospects for Indonesia and we will continue to invest ahead of the curve in production and distribution capacity and cold drink coolers,” Mr Davis said.

Around 60,000 new cold drink coolers will be placed throughout Indonesia in 2013 – a 30 per cent increase in the number of coolers in the market.

CCA on Tuesday also said it had struck deals with brewer Molson Coors to distribute a range of premium beers in Australia from December 16, 2013, and with C&C Group to distribute its beer and cider portfolio in New Zealand and the Pacific region.

Under the terms of the sale of CCA’s previous joint-venture beer business to SABMiller, CCA was restrained from selling, distributing or manufacturing beer in Australia until December 16, 2013, but can distribute beer in other markets.

CCA is targeting more than one per cent in earnings growth from its alcoholic beverages business from 2014 onwards.

Shares in CCA were 62 cents, or 4.87 per cent, lower at $12.12 at 1310 AEST on Tuesday.

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