The Coca-Cola Company holds the largest market share and is the leading player in the Australian soft drinks market, generating a 39.4% share of the market's volume.
Asahi Breweries, Ltd. accounts for a further 8.1% of the market (refer to Appendix E.4).
COCA-COLA AMATIL (CCA)
The company is headquartered in Sydney and manufactures, distributes and markets carbonated soft drinks, still and mineral waters, fruit juices, coffee and other alcohol-free beverages. The company also distributes alcohol-based beverages through its joint venture company Pacific Beverages. It is also involved in the processing and marketing of fruits, vegetables and other food products.
The beverage business consists of non-alcoholic and alcoholic businesses. The company, through its non-alcoholic beverage business, manufactures, distributes and markets carbonated soft drinks.20
The company ‘strives to refresh the world, inspire moments of optimism and happiness, create value and make a difference’.21
Major products and services include alcoholic beverages and food as well as logistics business and restaurants. Non- alcoholic beverages include: coffee, carbonated beverages, tea-based drinks, water, fruit and vegetable drinks, chilled beverages. 22 Brands offered within the CSD category include Coca-Cola, Diet Coke, Coca-Cola Zero, Sprite, Sprite Zero, Fanta, Lift, Deep Spring Natural Mineral Water, Appletiser, Grapetiser, Kirks, and Bisleri. The company enjoys the continued growth of Coke Zero which now holds over 40% share of the diet cola category in the immediate consumption channel. Mother energy drink grew volume by 6% as a result of new flavour and pack variants and now has 24% of the total energy drink market.23
The business recovered cost of goods sold through a pricing and mix strategy and CCA’s beverage market leadership position continues to dominant volume and value share across all channels despite more aggressive competitor pricing. 24
The synergies enjoyed are the exceptional capacity and capabilities throughout the by the company span entire supply chain and distribution. CCA’s major capital investment program reduced operating costs and delivered effective customer service 25 however the company continues to focus on efficiency, service and revenue gains right across the business. This will be achieved through the effective balancing of pricing, volume growth and market share. Competitive position will be further strengthened via capacity expansion, increased operational efficiency and introduction of cold drink coolers, as well as successful new product and package innovation.26
The competitive intent of the company is to increase capability and capacity expansion, diversifying business ventures with the rollout of cold drink coolers. CCA will continue to focus on executing its organic growth strategy in conjunction with the acquisition of Fijian brewery, spirits and soft-drinks assets, creating synergies from CSD sector, which includes brands such as Fiji Water, Cascade and Hi-C. Other possible strategies include a distribution deal with Adelaide-based family-owned Coopers Brewery.27
Resources, similar to growth strategies, include acquisitions such as Neverfail Springwater. Such an acquisition considerably strengthens the company's core competencies and competitive position. CCA also owns an established plant at Richlands in Brisbane, Australia and automated materials handling facility in Mentone, Victoria, Crusta Fruit Juices and its subsidiary, Quenchy Crusta Sales, a cold chain distribution company, Quirk's Refrigeration28 and the Northern Territory soft drink sales, distribution and production assets. The company dominance throughout the entire supply chain positions the company in an extremely sustainably competitive position. This engagement of major supply chain partners is part of CCA’s strategy to strengthen their competitive position, which they have done so through the development of collaborative capabilities and engaging supply chain partners.29
However the company's source of competitive advantage extends further to innovative packaging and advertising, the coke trademark (patent?), the three-year agreement with the National Rugby League Partnership (NRL) from March 2010 and Project Zero. 30
STRENGTHS
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Supply chain, market and natural resources dominance
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Well known, market leading brand
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Innovative advertising, branding and packaging
WEAKNESSES
THREATS
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Major competitors: National Beverage Corp. PepsiCo, Inc. Just Water International Limited31
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Changing consumer habits
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Industry decline
Additional notes:
Coca-Cola: Jayne
Company website: CCA’s product portfolio consists of: Coca-Cola, diet Coke, Coke Zero , Fanta , Sprite, Powerade, Glacéau and Pump, as well as other trademark beverages of The Coca-Cola Company. CCA bottles and distributes these brands in its territories under license from The Coca-Cola Company.32
Beverage brands owned, manufactured and distributed by CCA including Mount Franklin, Deep Spring and Kirks.33
The premium spirits portfolio of Beam Global Spirits & Wines including Jim Beam, Canadian Club, Makers Mark and The Famous Grouse.34
Coca-Cola Amatil Australia uses water from metropolitan supplies from natural groundwater sources.35
Their Environmental Management System continues to improve efficiency in water production facilities while maintaining open dialogue with governments, non-government organizations and local communities regarding water resource management.36
Coca-Cola Amatil (CCA) is one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region and one of the major Coca-Cola bottlers in the world.37
CCA’s diversified product portfolio includes carbonated soft drinks, water, sports and energy drinks, fruit juice, coffee, flavored milk and ready-to-eat fruit and vegetable products and snack foods.38 Pacific Beverages, CCA’s 50/50 joint venture with SABMiller, manufactures and markets a range of premium beers in Australia and New Zealand and sells and distributes premium spirits. CCA has access to over 270 million consumers through over 600,000 active customers.39
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42
To improve its portfolio in the noncarbonated drinks segment, Coca-Cola acquired Mad River Traders (tea, juices, and sodas) and Odwalla (juices and smoothies) in 2001. Also signed a licensing deal with Danone to promote Evian brand in the US.43
Coca-Cola introduced new products, such as Coca-Cola C2, in Japan and the US during 2004. In the UK and 19 other countries, the company began selling its Dasani bottled water.44
In 2005, Coca-Cola introduced a new product called 'Coca-Cola with Lime' in the US.45 Coca-Cola replaced Pepsi as the primary beverage served on University of Arizona campus, as part of the exclusive 10-year deal products from Coca-Cola would be offered in every vending machine and fountain outlet across every University-operated dining location on the University of Arizona's main campus.46 In the same year, Coca-Cola entered into a partnership agreement with six US restaurant chains owned by affiliates of Sun Capital Partners to promote its products in more than 1,750 restaurant locations across 28 states.47
Coca-Cola Company and H.J. Heinz Company announced a strategic partnership in February 2011 that enables Heinz to produce its ketchup bottles using Coca-Cola's PlantBottle packaging.48
 49
The company’s products are made available to consumers throughout the world through a network of bottling partners, distributors, wholesalers and retailers - the world’s largest beverage distribution system. The company’s vast distribution network spans the globe and allows the company to sell products in some of the most remote markets in the world. This distribution model is costly for competitors to replicate, and has acted as a sturdy barrier to entry in the industry.50
The company's large scale of operation allows it to cater to demands in upcoming markets with relative ease and enhances its revenue generation capacity.51 Growing nonalcoholic ready-to-drink (NARTD) beverage industry.52
Globally the nonalcoholic ready-to-drink (NARTD) market is growing at a significant pace. The NARTD beverage industry is expected to continue growing retail sales approximately 6% per year for the next 12 years (2008-20).53 This projected growth is being fueled by increase in middle-class consumers and fast-growing urban societies expected to form in the future. These trends indicate that there will be more people with more disposable income who potentially will tap into refreshment and convenience. This growth opens up a new world of opportunity for Coca-Cola. The company can capture this growth with innovative products and targeted go-to-market strategies, which will continue to drive its global beverage leadership.54
Threats - Evolving consumer preferences
Increasing concern among consumers, public health professionals and government agencies of the potential health problems associated with obesity and inactive lifestyles represents a significant challenge to Coca-Cola’s industry. In addition, some researchers, health advocates and dietary guidelines are encouraging consumers to reduce consumption of sugar-sweetened beverages, including those sweetened with high fructose corn syrup (HFCS), a form of sugar, or other nutritive sweeteners. Furthermore, there has been an increase in the number of regulations regarding carbonated soft drinks in the US in response to the heightened desire for healthy food consumption. Many state public school systems banned the sale of soft drinks on their campuses. The Center for Science and Public Interest proposed that a warning label be placed on all beverages containing more than 13g of sugar per 12-oz serving. This proposal would affect all non-diet, full calorie drinks produced by the company. These factors have driven a shift in consumption away from carbonated soft drinks to healthier alternatives, such as tea, juices, and water. An increased consumer preference for healthier drinks has resulted in slowing growth rates for sales of carbonated soft drinks, which constitutes 77% of company’s sales. Although Coca-Cola responded to the changing preferences by developing a range of diet and light beverages, evolving customer preferences will adversely impact the sales of its carbonated beverages which will in turn impact its overall profitability.55
Water scarcity and poor quality would impact production costs and capacity
Water is the main ingredient in substantially all of Coca-Cola’s products. Rapid population growth and continued pollution of existing freshwater sources have created water shortages in nearly every country. Global consumption of water is doubling every 20 years, more than twice the rate of human population growth. According to the UN, more than one billion people already lack access to fresh drink water. By 2025, the demand for freshwater is expected to rise by 56% from the amount that is currently available. As a result, Coca-Cola may incur increasing production costs or face capacity constraints which could adversely affect its profitability in the long run.56
The Australian beverage business delivered a solid result with earnings before interest and tax (EBIt) increasing by 3.0% to $281.0 million. The business has had to deal with the impact on volumes and a short-term increase in costs caused by the destructive floods in Queensland and Victoria and Cyclone yasi which occurred during the peak summer trading season.57 As well, the generally softer consumer spending environment experienced in 2010 continued into 2011, limiting category growth.58 Notwithstanding the difficult conditions, mix improvements, Project Zero efficiency gains and cost out initiatives underpinned the growth in margins from 19.9% to 20.2%. The business has maintained its strong market share position despite a high level of competitor discounting activity in the grocery channel during May and June. New product development for the half was focused on the rollout of new packages and flavor extensions. The frozen beverage portfolio continues to grow strongly with volume growth of over 20% as a result of the expansion of the customer base combined with the introduction of new flavors.59
The successful execution of our infrastructure programs in expanding manufacturing capacity and improving operational efficiency has again delivered a reduction in operating costs and further improvements in our customer servicing capability. Combined with the restructuring of the spc ardmona (spca) business, I believe these initiatives will continue to widen the operating capability lead on our competitors.60
Looking forward, cca will continue to focus on executing its organic growth strategy.61
There have been an unprecedented number of natural disasters across our major markets over the last six months. The floods in Queensland, Victoria and NSW, Cyclone Yasi and the Christchurch Earthquakes.62
CCA has deployed teams to provide assistance to those affected and provided customers with extended terms and special offers for re- stocking CCA product. In addition, CCA has donated beverage and food products to communities and emergency services in need and we are matching all employee donations to the flood relief program.63
Dividends up 11.5% in 201064
Improve our profitability and market position.65
Weaker consumer demand66
Cadbury has entered into a conditional agreement to sell its Schweppes beverages business in Australia to Asahi Breweries for a total cash consideration of approximately GBP550 million.67
m P&N Beverages Australia Pty., Ltd., a manufacturer and distributor of non-alcoholic and non-dairy beverage products. Both the companies are based in Australia.68
Coca-Cola Amatil Ltd. (CCA), a beverage and food company, has discontinued discussions with Golden Circle Limited (GCL), a grower-owned fruit and vegetable processing company, in relation to the planned acquisition of GCL after its AUD195 million ($173 million) offer was rejected in favour of a private equity deal.69
Coca-Cola engages in the manufacture, distribution and marketing of non-alcoholic beverages, concentrates and syrups. Coca-cola (TCCC) markets 4 of the worklds top 5 non-alcoholic sparkling brands (Diet coke, fanta and sprite) The companies finished beveraged is sold in more then 200 countries and the TCCC is headquartered in Atlanta, US and employs around 139,600 people. Most of TCCC products are manufactured and sold by bottling partners. Coca-Cola is the biggest selling product of TCCC other popular drinks include Beat, Canada Dry, Cherry Coke, Diet Coke, Fanta, Sprite etc. In 2011 (January) Coca-Cola Amatil (AUS) launched Nestea range of ice tea in pear and honey variety. Asahi Breweries primarily is focused on beer rewing.
PAB division accounted for 35.3% of total revenues in FY2010. Revenues from PAB division reached $20.4 billion in FY2010, as compared to 10.1 billion FY2009.
Top 3 players in the AUS market – Coca-Cola, Asahi Brewery and PepsiCo. These 3 hold 54.9% of the total soft drink market. 70
(23) Coca-Cola is dominant in the carbonated soft drinks market in Australia, the product, Coca-Cola alone accounted for more than 75% of the sales value in 2001. PepsiCo is the second most successful company in the Australian carbonated drinks market. PepsiCo experienced a faintly rise of 0.5% for the year 2001 in its share value. However, it is a long way from PepsiCo, commanding only one-tenth of the carbonated market. Cadbury Schweppes also makes a notable impact on the market with their Schweppes lemonade. Solo control only small sections of the market. Leading companies: Coca-Cola, PepsiCo, Cadbury Schweppes, Solo.
Australia - Carbonated Soft Drinks, Market Profile, www.datamonitor.com
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