Coca-Cola Amatil’s Alcohol & Coffee division is celebrating its fifth successive year of double-digit EBIT growth in 2019.
The result was led by a strong performance in spirits and RTDs, driven by Canadian Club and innovations such as Koyomi premix and Roku Gin.
It comes as Coca-Cola Amatil’s Australian business records its first full-year revenue increase since 2012.
The full-year results for 2019 include a 6.7% rise in trading revenue, with EBIT growth increasing to $639.3 million.
The stand-out performers in alcohol
Tobias Hoogewerff, Sales Director Licensed, said Canadian Club continued to be a stand-out spirit for Amatil.
“Canadian Club has been growing year on year for the last five or six years,” he said. “It has unisex appeal, is social in the way its communicated and has an image of being a licence to have fun.”
He added that getting the brand on tap in the on-premise market had been key to its success, with consumer trial resulting in a high conversion rate.
No sugar products also saw strong growth in both the non-alcoholic and RTD categories.
Coca-Cola No Sugar enjoyed double digit growth, while Jim Beam and Canadian Club are now the No.1 and No.2 no-sugar RTD brands respectively.
Group Managing Director Alison Watkins said: “The continued volume growth in Coca-Cola No Sugar is a testament to consumer enthusiasm for healthier options, and a sign of the strength of our portfolio.
“We’ve heard the message on consumer well-being, and we’re delivering with reductions in sugar content across the portfolio of sales.”
Hoogewerff added that the recently launched Koyomi was also benefiting from the well-being trend.
“Koyomi is a really interesting RTD for us,” he noted. “It’s a sochu-based spirit drink and a strong growth platform. There’s been a huge rise in interest in Asian drinks from both customers and consumers in the whisky and gin categories and Koyomi is an extension of that.
“While there has been an education element involved with the brand, as it’s a new category for Australia, we’ve found consumers are becoming quite adventurous and willing to explore new things.
“There’s also a growing focus on lower calorie and lower ABV, which Koyomi really taps into.”
Hoogewerff pointed to three other success stories in spirits.
“We’ve given Jim Beam White a lot of focus and it’s returned to growth, which is great to see as the brand celebrates its 225th anniversary this year,” he said.
“Makers Mark is really connecting with young consumers and urban professionals. And Roku Gin is now one of the top 5 premium gins in retail sales value in Australia, which is outstanding.”
Big news for Amatil Beer & Cider
Hoogewerff revealed Amatil has hired a new Beer & Cider Director, Ben Slocombe.
Slocombe was Marketing Director of Lion Beer until December 2017 and has more recently been Marketing Director of Blackmores.
“It’s fantastic to have someone with his experience to help grow our beer and cider category,” he said.
Slocombe starts with Amatil in April.
Hoogewerff said one of the stand-outs in the beer category for Amatil in 2019 was Feral Brewing.
“The Feral acquisition is a really proud one for us,” he said. “The success of Biggie Juice in the GABS Hottest 100 [the brew made it back into the top 10] was a testament to the work Feral and Amatil have put into maintaining the brand’s quality.”
Australia doesn’t need seltzer
During an analyst call, Australian Beverages MD Peter West said Amatil was focused on expanding its current offerings rather than entering the seltzer segment.
“Right at the moment, seltzer is not really playing out as any major play in the market,” he said.
“I personally think that the category will continue to grow over time, but there is an introduction that is required. Everyone is looking at plans in hard seltzer.
“We think that we’ve got offerings already with Canadian Club that blur some of that line. And so the types of things that we bring on Canadian Club and the types of innovation, we think, were actually well positioned.
“So the key discussions that we have with our brand partners is the things that we can expand under our current offerings rather than just the new stuff that you have to then introduce the whole concept of what a hard seltzer is. But that need and that blurring of category lines are certainly happening.”
Hoogewerff noted that while selzter is light and refreshing, it’s exploded in the US because there isn’t an RTD category.
“However, Australia already has a large RTD category and consumer needs are being met for the most part,” he said.
No major bushfires impact
Earlier this week, Campari CEO Bob Kunze-Concewitz revealed the company “had a very weak January in Australia because of the bushfires”.
“Nobody was in the mood for celebrating,” he said. “And you actually see that in the off-take data of all spirits as well as beer.”
His view was shared by Coles CEO Steven Cain, who blamed the bushfires for the drop in liquor sales in the company’s HY20 results.
“People were eating out less during the bushfire period,” he said. “They were spending more at supermarkets, but they appeared, certainly in January, to be spending less on alcohol out in the garden over the BBQ.”
Regarding Amatil Alcohol & Coffee, Hoogewerff said: “You cannot be Australian and not feel the impact of the bushfires.
“We can all look at our own behaviour and know you didn’t feel like partying when the country was on fire. There was an impact on sales in some states, but we do not see it as material.”
Watkins added: “We remain on watch for flow-on effects on the economy of the bushfires in Australia and coronavirus (COVID-19).
Coca-Cola Amatil donated 280,000 bottles of beverages during the bushfire crisis, gave paid leave for volunteers, cash donations to registered charities and employee matching, and offered a small business customer relief package.
