By Catie Low
Coca-Cola Amatil is looking to healthier beverages to bolster its sales and make up for declining sales of its sugary soft drinks.
Speaking after Coca-Cola Amatil's annual meeting on Tuesday, chief executive Alison Watkins said "functional beverages" such as the kombucha represented interesting opportunities for the distributor and bottler.
"It's definitely an area where we can do more but at the same time our core brands from the Coca-Cola portfolio are hugely important," Ms Watkins said.
"It's really about being a total beverage company."
Can Kombucha get Coke back on track? Credit: iStock
Coca-Cola Amatil's underlying net profit is expected to go backwards in the six months to June and the full-year result is expected to be broadly in line with last year's result amid fierce competition and promotional activity in the supermarket channel.
Beverage insiders claim Asahi – which controls Pepsi, Solo and Schweppes – has been winning market share from Coca-Cola Amatil since late last year fuelling analyst concerns about its second-half performance.
Ian Carmichael, consumer analyst at Watermark Funds Management, said Coca-Cola Amatil's second-half outlook was a bit of a "trust me story".
"I think they're doing the right things in terms of broadening away from carbonated soft drink but the problem they have with water is that no one can taste the difference between $5 water and $2.50 water," Mr Carmichael said.
Coca-Cola Amatil managing director Alison Watkins.Credit: Cole Bennetts
"It's fine if you have a big marketing story but for a brand like Mount Franklin without a story, it's difficult."
Tough market
Speaking after the annual meeting, Ms Watkins dismissed Asahi's recent performance as the result of promotional activity but acknowledged iconic brands such as Coke and Sprite needed to keep pace with consumer taste.
Coca-Cola Amatil group managing director Alison Watkins is confident Australia's beverage market is growing.Credit: Bloomberg
"Supermarkets' soft drinks are one of the most heavily promoted categories and our competition has been promoting very aggressively," Ms Watkins said.
"You get short-term swings based on certain products but over time these things tend to even out."
Australia is an important test market for Coca-Cola Amatil's new products and despite the disappointing uptake of Coke Life, which used stevia instead of sugar, Coca-Cola Amatil said it would continue to develop new products and test out new ideas.
The Barista Bros iced coffee product is a brand that Coca-Cola developed in Australia in conjunction with its US parent and the line will now be launched in other international markets.
"One of the great things about working with the Coca-Cola company is that there is always a pipeline of new product," Ms Watkins said.
"This has allowed us to roll out new formulations, like Coca-Cola with stevia that are permanent additions to the portfolio or short runs that create excitement for consumers like Coca-Cola with ginger.
"We are excited about The Coca-Cola Company's consumer-driven total beverage strategy which is led by new president and chief executive James Quincey."
Retail analysts suggest Mr Quincey has broadened Coca-Cola's focus from the iconic Coke brands to the group's full range of beverages, reflecting a decline in consumer loyalty to any one beverage brand.