Coca-Cola spends $70m on fast bottling plant in Melbourne
Consumers are reaching for Coke, pushing the bottler to invest $70m in its Melbourne factory as it keeps a watch on energy cost pressures.
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Coca-Cola Europacific Partners has invested $70m in a newly expanded bottling plant in Melbourne as it tips strong festive season trading.
The investment of $43.7m on the new factory, that can produce up to 1700 slimline cans per minute, is matched by $17.4m invested in its warehouse space and back-end automation.
Peter West, general manager of Australia, Pacific and Indonesia, said the last quarter was “incredibly strong” but energy costs were a challenge.
Although his Coca-Cola bottling business is making the shift to renewable energy and is squarely focused on sustainability, the price of running plants remains elevated, he said.
“I would say we’ve seen incredible inflationary pressure right across the board and it’s also for our suppliers, therefore, it does mean that we are not immune to the impact of that and therefore the need to take (lift) pricing,” he said.
He said greater efficiency in the business as well as sealing good value energy contracts has helped buffer the bottler from the worst spikes in energy prices.
“I think 2024 is still an uncertainty of what happens in the broader economy, and what happens on energy,” he said.
“But the outlook for us for 2023 still remains strong despite a lot of broader concerns on interest rates, I think the Australian market feels more resilient.
“We probably saw Australia Day was the first return to normal, a strong Easter and then the last quarter has been incredibly strong. So, our outlook for 2023 remains buoyant.
“The low level of unemployment in Australia is an enormous buffer for people’s ability to withstand inflation.
“The second area I think is as savings levels pre-Covid reached record levels and they continue to have very high levels of savings.
“Then there is something about the flexibility of work. How people spend money is different. So less money, in our mind, on things like tolls, petrol, transit as people do the combination of work in the office.”
Coca-Cola Europacific Partners, which bought local bottler Coca-Cola Amatil for $9.8bn in 2021, elevated Mr West to his role when then CEO Alison Watkins left when the takeover was completed.
A 35-year veteran of the packaged goods industry, Mr West says he has never seen it as tougher when it comes to securing supply chains in the wake of the Covid-19 pandemic and it had added costs to the operations.
“That probably has meant a bit more dual supply on some inputs where we might have had sole supply. And it’s also taking into account some of the raw materials and inventory that we might hold to help buffer what continues to be a vulnerable supply chain,” he said.
“This is the most vulnerable I’ve seen in supply chains and therefore the contingency management and the hyper care that is required is really stepped up.”
Originally published as Coca-Cola spends $70m on fast bottling plant in Melbourne
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