Australia focus
Coke faces Aussie setback with No Sugar drink
Coca-Cola No Sugar is the soft drink maker’s biggest product launch in a decade and what the company hopes will be the answer to declining sales.
The product has had five years of development and 18 consumer taste test trials, and now Coke says it has achieved what eluded it for so long — a sugar-free cola that tastes just like classic Coca-Cola.
In a huge marketing blitz, it is giving away 2 million free samples in Australia.
But in a setback to the plans of Coca-Cola Amatil — which bottles and sells Coke in Australia, New Zealand, Indonesia and around the Pacific — supermarket chain Woolworths has refused to stock the product.
Woolworths says consumers already have enough choice of Coke products, including Coca-Cola with Stevia, Coke Zero, Diet Coke, classic Coca-Cola and Vanilla Coke and it doesn’t want to give over more shelf space to Coke.
Coca-Cola is planning to withdraw Coke Zero, which will presumably create some shelf space, but in the meantime the decision is a setback to its ambitions.
While the company may not lose a lot of sales in the short-term, it does mean the new products won’t be exposed to the 10 million or so shoppers who go to Woolworths every month.
In another blow, pizza chain Domino’s announced it was switching to Pepsi for its soft drink sales. Like the Woolies decision, it’s not huge in terms of sales — Deutsche Bank estimates Domino’s accounts for just 0.3 per cent of CCA’s total Australian beverages volume. But it points to intense competition in the soft drink segment, where manufactures are under pressure from retailers to drop prices.
Australian beverages account for two thirds of CCA’s profits, so the company needs to get this right.
Sales of Coke and other fizzy drinks have been declining as consumers and health authorities become increasingly worried about the health effects of sugar.
One of the problems with Coke Zero is that many consumers didn’t
Australian beverages account for two thirds of CCA’s profits, so the company needs to get this right
know that it didn’t have any sugar. Hence the name No Sugar, to ensure no confusion remains.
Part of the problem has been that many drinkers of classic Coke simply haven’t liked the taste of the various diet Coca-Cola products. Coke is hoping that by masking the metallic taste inherent in most no-sugar drinks, it can pick up those consumers.
In Australia, CCA’s sales have been falling for more than a decade, and higher consumption of bottled water and still beverages has failed to offset the slump in sales of fizzy drinks. Sparkling beverages volumes fell 4.7 per cent last year.
CCA makes — if that is the correct word — its own water, but that market segment is also under threat. As consumers grown increasingly concerned about waste and rubbish, there is a mounting backlash against buying bottled water. More and more consumers are carrying and refilling their own bottles.
Each time a local council puts a water bottle refilling station (these used to be known as taps) into a park, it is another blow to CCA’s profits.
Coca-Cola Amatil shares fell sharply in April after the company downgraded its profit expectations, saying that both volume and prices were lower than expected and there would be no profit growth for the year.
The shares slid 10 per cent to A$9.60 and since then have fallen further. They slipped to a two-year low of A$8.43 on Friday. In fact, the share price has nearly halved in the past five years, and Coke’s problems are looking to be entrenched.
Elon Musk to the rescue
Could Telsa founder Elon Musk provide the solution to South Australia’s energy crisis?
South Australia produces about 40 per cent of its power from renewable energy and as a result has been hit by blackouts when renewables can’t keep up with surges in demand — such as on hot days when everyone turns on their air conditioners. The problem is that until now there was no practical way of storing large amounts of renewable energy.
However, Musk believes he can solve the problem with a 100-megawatt battery.
What’s more, he will honour a bet he made with Australian internet billionaire Mike Cannon-Brookes that he’ll have it up and running in 100 days or it’s free.
The project will be the world’s largest battery and will be a big test of whether battery storage is practical in largescale power supply.