Coca-Cola is witnessing improving sales further out from CBDs
The new head of the conglomerate behind Coca Cola in Australia says he’s noticed a very distinctive, COVID-driven pattern in its sales.
The ripples from COVID-19 lapping against consumer behaviour in communities and workplaces in Australia has produced a strange phenomenon for beverage giant Coca-Cola, in that for every 5km you move from the nation’s CBDs its sales of drinks improves.
Get more than 30km from the centre of town and it’s booming.
With many still working from home, the old office water cooler has been deserted to cause a prolonged slump in water sales.
It comes as the new regional boss for Coca-Cola Europacific Partners in Australia, Peter West, is celebrating a global-beating 8 per cent bounce in beverage sales for the bottler in the first quarter. Although he is encountering wild swings within his categories as bottled water sales suffer, energy drinks shine and its Coke “no sugar” brand enjoys a 15 per cent lift in sales over the summer.
Speaking in his first interview since being named general manager for Australia, the Pacific and Indonesia, for Coca-Cola Europacific Partners after its $9.8bn takeover of bottler Coca-Cola Amatil, Mr West said the business had a “fast start” to the year.
“The success of that was certainly driven off the Coca-Cola brand and the Coca-Cola no sugar brand, and we are up more than 15 per cent on our no sugar portfolio,” he said.
“We did continue to see quite a variation in demand on COVID, which is that the water category remains down, and then we also had our wettest summer in years which affected our frozen business.
“The mix of what we have sold has been very favourable to selling more Coca-Cola, more Coca-Cola no sugar, strong energy drinks through our Monster brand.
“We were confident of how volumes would return but the mix of where they are sold — locations — is going to be very different to 2019, and we think that is not just going to play out this year but is going to be an ongoing change in the marketplace.”
Mr West’s comments come after Coca-Cola Europacific Partners issued its quarterly results that showed its newly acquired Australian, New Zealand, Indonesian and Pacific businesses had been its best performing region.
Damian Gammell, the chief executive of Coca-Cola Europacific Partners, which recently wrapped up a $9.8bn takeover of local bottler Coca-Cola Amatil, told investors on the release of its first-quarter results that its newly obtained markets in Australasia were showing a rebound against a backdrop of tough trading conditions elsewhere in the world.
Coca-Cola Europacific Partners said in its quarterly results that Australia revenues were up 8 per cent to €516m ($799.8m), Pacific sales up 11 per cent and sales in Indonesia down 3 per cent.
Australia’s strong performance is in stark contrast to Coca-Cola Europacific Partners’ other regions, such as Germany where sales fell 9.5 per cent, and Spain, Portugal and Andorra where sales fell by 20.5 per cent.
Mr West provided more insight into the first quarter performance for the old Coca-Cola Amatil business, which is still showing the impact of COVID-19, especially when it comes to the types of categories doing well, those suffering and the overlaying of winners and losers depending on geography.
In terms of beverages, the reluctance of many workers to return to CBDs has had a deleterious effect on bottled water sales, with Coca-Cola Europacific Partners brands covering market leaders such as Mount Franklin and office supplier Neverfail.
“Our belief was that things would return to 2019 but behaviours wouldn’t, and the key changes to behaviour were going to be flexibility at work, and we don’t see people returning to offices five days a week, we see that in our Neverfail business which has a very strong component of office water,” Mr West said.
“In general people want to come back to work three days a week, and that changes where they buy, what they buy and the occasions. So they are not buying water as much, they are home for lunch and then buying different things for dinner.”
He pointed out that low tourism numbers were hurting hotels in CBDs but, alternatively, the explosion in domestic tourism has been helping to drive drink sales in regions and holiday spots.
“Every 5km from the city, the business improves and the best it gets is 30km-plus from the city, so regional is doing incredibly well. What we are seeing is a return to mobility but it is very different,” Mr West said.
He said vending machines sales for his beverages at railway stations were down 25 per cent, airports sales were down double digit but petrol stations and convenience stores sales had double digit rises.
“People are driving, they are more suburban and more regional,” he said.
Supermarket challengers say ‘change is in the air’
Alleged dirty tactics by Coles and Woolworths are shaping up to be a big opportunity for rival operators who say Aussies have had a gutful and a level playing field is needed.
Guzman y Gomez valuation ‘too spicy’
The Mexican fast-food chain has been added to the sell basket over its ‘overly ambitious’ store expansion plan, ‘inappropriately’ pegged stretched valuation and a stock overhang.