Coca-Cola Amatil loses fizz on beverage industry plunge

26 May 2020, Written by Paris Faint

Coca-Cola Amatil loses fizz on beverage industry plunge

The Covid-19 cocktail has been a hard one to swallow for the beverages industry, given that most of the world's watering holes remain out of business.

Venues are suffering, and new data from Alcohol Beverages Australia has also revealed a steep decline in alcohol consumption that would normally take place at home gatherings.

It's little wonder Coca-Cola Amatil (ASX: CCL) has been stirred into the struggle.

In its April trading update, Coca-Cola reveals Covid-19 lockdown measures in April have taken a toll on the peak Easter ANZAC Day and Ramadan trading periods.

Although it outperformed the sector in terms of share growth, the company experienced a ~33 per cent nosedive in the total volume of beverages sold.

Group managing director Alison Watkins says Coca-Cola has experienced an "unprecedented disruption" to its business during the pandemic, but is optimistic in its recovery.

"At the time of our last Covid-19 update we noted significant volatility across channels and markets as the impacts of the pandemic started to take effect," she says.

"This has continued With many customers remaining closed or operating at significantly reduced capacity."

"Despite these challenges, our business has demonstrated resilience As the lockdown restrictions begin to ease and local economies begin a protracted recovery, we are seeing signs of modest improvement in trading conditions."

In its Australian market, Coca-Cola saw a 30 per cent decline in volume of sales across its 'non-alcoholic ready to drink' category versus April 2019.

Coca-Cola customers who buy 'on the go' declined 55 per cent on the prior corresponding period, while grocery shopping fell 10 per cent and the convenience and petroleum segment took a 20 per cent hit.

As lockdown restrictions ease in the coming months, the company expects its financial performance will improve at a similar rate.

Watkins says that the company's FY2020 performance hinges on its fourth quarter.

"Whilst it is encouraging to see lockdown restrictions gradually being eased and some green shoots of improvement in trading conditions emerge, the reality is that economic recovery will take time and uncertainty remains," she says.

"We have a clear path forward to weather the current conditions, noting that the fourth quarter of trading conditions will be imperative to our FY2020 financial performance."

Author: Paris Faint





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