COKE’S STILL THE REAL THING, SAYS BRAND’S AUSSIE BOSS
COCA-COLA Amatil managing director Alison Watkins says she is not fazed by Coles’ push to dramatically increase its house-brand range, saying supermarkets will always stock products that sell.
But the head of the nation’s biggest beverage bottler has pointed out profitability is a function of both margin and turnover, noting that while supermarket-owned brands may generate higher margins, goods that fly off the shelves can be more profitable.
“If consumers are picking it up and it’s being turnovered fast, that is a really important driver of profitability,” Ms Watkins said.
“As long as our products are sought after by consumers, a retailer wouldn’t want to squeeze them out because that would be detrimental to their own profitability.”
Supermarket heavyweight Coles has declared it wants to be an “own brand powerhouse” and is pushing to have 40 per cent of its sales made up of its house-brand range by 2023.
Outgoing Coles managing director John Durkan has stressed the move is in response to customer demand and insists it won’t leave shoppers lacking choice.
“The last thing we need to do is push stuff onto consumers that they don’t want,” Mr Durkan said an investor update in June.
Coles private-label penetration is estimated to stand at about 28 per cent.
It is above 50 per cent for fresh items such as milk and meat but falls to low double digits in dry grocery items. It is the latter category that Coles will focus on.
The Australian Food and Grocery Council, which represents food manufacturers and suppliers, has expressed concern about the push.
Coca-Cola Amatil is a member of the Australian Food and Grocery Council but Ms Watkins said the company’s focus was on making sure its brands are as strong as the can be.
“All of our portfolio needs to have a really strong, compelling proposition — a really strong reason for being,” she said. “I’m very confident that if that is the case our retailers will want it on their shelves because it is going to sell.
“Ultimately that is what we will strive for. In that sense it doesn’t really matter if we are surrounded by private label or not.”
Ms Watkins was speaking t after the food manufacturer announced it was considering selling the SPC business.
Coca Cola paid $500 million for Shepparton-based SPC in 2005.