The spirits driving growth for Coca-Cola Amatil

August 22, 2019
By Alana House

Coca-Cola Amatil’s HY2019 have seen a 5.2% rise in revenue, with spirits driving growth for its Alcohol & Coffee division.

Amatil saw increased statutory earnings before interest and tax (EBIT) of $273.5 million, (up 4.7%), and increased statutory net profit after tax (NPAT) of $168.0 million (up 6.3%).

Alcohol & Coffee now represents 9% of Group earnings, with EBIT at $24.8 million, up 10.2%.

Earnings from the division grew by more than 10% compared to the first half of 2018.

Jim Beam White; spirits driving growth Amatil
Jim Beam White bottle next to glass of product on the rocks

Alcohol & Coffee grew share in bourbon, rum and vodka. Spirits driving growth included Canadian Club, Jim Beam White, Roku Gin and Makers Mark.

“Gangbusters would be the only way I could describe it,” Group Managing Director Alison Watkins said about the performance of Canadian Club.

Canadian Club & Dry also won the Gaining In Popularity RTD trophy for Dark Spirits at the Australian Drinks Awards on August 22.

The Gaining in Popularity category reflects consumers’ perceptions of brands they regard as currently trending.

Based on industry scan data, the top 200 brands were automatically entered in the brand category and judged via a Thrive Research survey of 4000 consumers.

Roku Gin; spirits driving growth Amatil

Overall, Watkins said the results were a solid performance for the Coca-Cola Amatil Group.

She noted that the New Zealand, Papua New Guinea and Alcohol & Coffee businesses all performed well, in line with expectations.

“The end of 2019 will mark the completion of our two-year transition period,” Watkins said.

“We’ve set ourselves the target of a return to mid-single digit EPS growth from 2020. While there’s more to be done, these results show good progress towards that goal.”

Watkins said the Australian Beverages business had again delivered volume growth in diet and no-sugar colas, alongside double-digit growth in energy and dairy. While overall volumes declined by 1.2%, Watkins said this was largely driven by the Container Refund Scheme in Queensland, where net volumes fell by 3.8%. Excluding Queensland, Australian Beverages volumes declined by 0.3% for the half.

EBIT was impacted by additional investment in “Feet On The Street” – which has almost doubled face-to-face visits with immediate consumption customers – and cycling a HY18 EBIT benefit of a one-off credit from the NSW container deposit scheme.

“The continued volume growth in diet and no-sugar Coca-Cola is a testament to consumer enthusiasm for healthier options, and a sign of the strength of our portfolio,” Watkins said.

“We’ve heard the message on consumer wellbeing, and we’re delivering with reductions in sugar content across the portfolio of sales.”

Performance & outlook for Alcohol & Coffee

Amatil reported that Alcohol & Coffee achieved “modest revenue growth and double-digit EBIT growth”.

“This performance reflects a strong momentum supported by our robust commercial strategy, best-in-class portfolio of brands, cost discipline and synergies with the NARTD business,” Watkins said.

New Zealand returned a strong result, benefitting from the strength of the Beam Suntory Premix & Spirits portfolio.

The business said it continued to work closely with all brand partners including Molson Coors International to drive the portfolio, including Miller, Coors and Blue Moon brands.

Other developments included strong growth in the Feral craft portfolio and a new distribution agreement with New Zealand-based brewer Fortune Favours.

“New Zealand & Fiji, Papua New Guinea and Alcohol & Coffee are expected to deliver growth in line with our Shareholder Value Proposition,” Watkins said.

Spirits driving growth in volume was supported by initiatives to build the brands which included a new sponsorship agreement with Australian Motorsport.

“Our partnership with Beam Suntory across Australia and New Zealand continues to deliver new growth opportunities,” the company noted.

Koyomi; spirits driving growth Amatil

“We have a category leadership position in bourbon as well as in new age whisky and are working with Beam Suntory to bring continued innovation to the market, such as our recently launched Koyomi Highball, a bespoke Shochu Highball premix beverage created especially for Australia, and Haku, the premium Japanese craft vodka from the House of Suntory.”

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