Woolworths refuses to stock Coca-Cola No Sugar

Coke shares sank after it was hit by Woolies’ refusal to sell its “No Sugar” brand and the loss of a Domino’s contract.

Woolworths says it won’t stock Coca-Cola No Sugar because it already has enough low-sugar brands on its shelves.

The Coca-Cola Company’s pitch to diet-conscious drinkers with its new “No Sugar” brand has been dealt a blow by supermarket giant Woolworths’ refusal to stock the soft drink.

It came as the soft-drink giant suffered another setback, with the nation’s largest pizza retailer, Domino’s, deciding to switch its allegiance to rival Pepsi.

The dual blows resulted in shares in the company (CCL) sinking 3.4 per cent to $8.91 by the close, close to a 12-month low.

The US-based Coca-Cola Company launched its Coca-Cola No Sugar brand in Australia last month after five years of trials and consumer tests.

It hopes the brand will replace Coke Zero among consumers who enjoy the traditional taste of Coke but don’t want the sugar.

Supermarket giant Coles is heavily promoting Coca-Cola No Sugar and it’s on sale in many other retailers and convenience stores.

However the country’s largest supermarket chain, Woolworths, says it has no plans as yet to sell the brand, claiming it has enough low-sugar and no-sugar options on its shelf in the crowded carbonated drink segment.

Around 60 per cent of the soft drink category is branded as some kind of diet, zero sugar or low sugar product.

Woolworths’ decision to effectively block the sale of “No Sugar” in its stores is a serious blow to the plans of the Coca-Cola Company and its local partner Coca-Cola Amatil to expose the drink to the Australian market and to get consumers to test the new flavour.

While Woolworths’ move could hurt the new brand’s chances of gaining traction with shoppers, The Coca-Cola Company is giving away two million free samples through different outlets in the next eight weeks,

It is not known if the free samples are intended to get around Woolworths’ refusal to stock the brand.

A spokesman for Coca-Cola Company said he couldn’t comment on Woolworths’ decision as this was an issue for the local bottler, Coca-Cola Amatil, and not the US maker.

A Woolworths spokesman told The Australian: “We have taken the decision to not range this product at this time.

“Our customers looking for a no-sugar or low-sugar cola option have ample choice already in the category across a range of different pack sizes and formats. We continue to stock Coca-Cola Zero in our stores nationwide.”

Coca-Cola No Sugar is viewed as a new and crucial defence in The Coca Cola Company’s armoury as consumers in developed countries increasingly move away from sugary carbonated drinks to healthier options.

Coca-Cola Amatil’s volumes in Australia have been steadily falling since 2005 as it scrambles to find new drinks to fill the widening hole created by the shift to healthier drinks.

A spokeswoman for Coca-Cola Amatil declined to comment on Woolworths’ refusal to sell the new brand.

Coca-Cola Amatil CEO Alison Watkins is a former director of Woolworths.

Coca-Cola was dealt another blow this morning with the decision by Domino’s to dump Coca-Cola in its pizza stories in favour of Pepsi, following a contract renewal.

It is estimated that Coca-Cola sold though Domino’s accounts for 0.3 per cent of total volumes in Australia for the local bottler, Coca-Cola Amatil.

The transition by Domino’s to Pepsi will happen in September, with the new contract running for several years.

“We’re always very disappointed when we customers choose not to make our products available to their consumers, but respect their decision to do so,” said a Coca-Cola Amatil spokesperson.

“Our great range of globally iconic brands and local favourites are still available across the majority of quick service restaurants in Australia.”

Deutsche Bank analyst Michael Simotas observed: “This is clearly a negative development for Amatil and follows news that Woolworths will not be stocking the recently launched Coca-Cola No Sugar product.”

Mr Simotas said in a note to clients overnight that the switch to Pepsi from Coca-Cola should help costs for Domino’s franchise owners, as typically Coca-Cola is priced at a premium.

Coca-Cola Amatil shares were down 2.4 per cent in early trade at a two-week low of $8.97.

Domino’s may also tackle the cost issue by shrinking the size of its pizzas, the note said.

“Domino’s has already conducted trials on selling Pepsi products and is about to conduct trials on the smaller pizzas, but we see some risk to consumer perception from both of these initiatives.”

A Domino’s spokesman said the Deutsche Bank note was “taken out of context” but did not deny smaller pizzas were being tested.

“It is unfortunate that the note today provides information on our menu development that has been taken out of context.

“Domino’s development kitchen is working on an enhanced menu to cater for our customers’ diverse taste requirements, including new pizzas, sides and desserts.

“We look forward to launching our new menu, and seasonal range, later this year, and are confident customers will enjoy both the quality and quantity of the menu offerings.”