Coca-Cola is back in the game

THE struggle is real for Coca-Cola, with the sugar police giving the soft drink company a run for its money. But a revival could be underway.

Is Coke about to make a comeback?

SMALLER drinks, colour changing cans, low sugar options and coconut water have helped arrest a downturn in Coca-Cola Amatil’s Australian business.

The soft drink company has finally delivered profit growth after a two-year slide, securing 4.8 per cent earnings growth in 2015.

Net profit rose 45 per cent to $393 million as consumers bought more frozen drinks, Coke in smaller cans and bottles — and the new Coca-Cola Life, a Coke brand with 35 per cent less sugar.

The new product now accounts for one to two per cent of sales under the Coca-Cola trademark.

Consumers also favoured “enhanced” water products such as coconut flavoured water.

CCA has been challenged in recent years by changing tastes towards water, low sugar and dairy drinks, as well as a slowing economy in Indonesia, its other major market.

Earnings from Australian beverages lifted 0.2 per cent to $464 million, and rose 9.9 per cent to $48.7 million in Indonesia and Papua New Guinea.

Group managing director Alison Watkins said the company had delivered on its plans and guidance despite continued challenges.

Coca-Cola Amatil chief executive Alison Watkins appears to have arrested the company’s decline, but there is work ahead. Picture: Dan Himbrechts

Cost cutting, new products, smarter packaging, smaller portions, improved marketing and a stronger relationship with parent The Coca-Cola Company delivered benefits, managing director of Australian beverages Barry O’Connell said.

“But we expect that operating conditions will continue to be challenging, and there’s going to be pricing pressure across categories, particularly in water,” he said.

“But in terms of volume we expect to outperform the overall market.”

Economic growth in Indonesia has slowed to its lowest level since 2009 as commodity prices fall and the Indonesian rupiah depreciates, resulting in slower-than-anticipated growth in CCA’s volumes and increased costs.

“I think we’ve been surprised by the fairly rapid deterioration in the Indonesian economy that has occurred,” Ms Watkins said. However CCA has increased its market share in the sparkling beverages and tea categories in Indonesia.

Ms Watkins said the company was working well with The Coca-Cola Company (TCCC) to realise the long-term potential of the Indonesian market.

She said CCA was confident of returning to sustainable mid-single-digit growth in earnings per share over the next few years.

The company’s shares gained 35 cents, or 4.14 per cent, to $8.80 at yesterday’s close.