July 21, 2008
just-drinks.com editor's weekly highlights
This past seven days has been a tough one for the Coke brand. Late last week, The Coca-Cola Co. reported a fall in second quarter earnings, as the company took a hit on a non-cash impairment charge at bottler Coca-Cola Enterprises.
Things looked altogether bleaker, however, for two of its bottlers. CCE reported a second-quarter net loss of US$3.2bn. Meanwhile, over in Charlotte, Coca-Cola Bottling Consolidated announced plans to shed 5% of its workforce.
Beverage analysts at Goldman Sachs removed Coca-Cola Co from its Americas conviction buy list last week on the back of the "mixed" second-quarter earnings report. The deteriorating US economy is taking few prisoners and Coke is proving no exception.
"We now expect the drag from a weak US along with a tempered international backdrop to hold performance back," said analyst Judy Hong.
The problem Coke and its bottlers face is that the issue of declining volumes in its traditional CSDs is being made all the more serious by soaring raw material costs. The Coke family looks set to announce price rises to try and counter the problem, but one can only foresee this affecting volumes even further. For more check out this week’s In the spotlight.
And just when you thought this may be the first weekly newsletter in an age not to mention either Anheuser-Busch or InBev, click here for the final word on InBev's acquisition of A-B.
Now, let's all go and enjoy the sun, shall we?
Until next time...
Olly Wehring, Managing Editor
I know what is top of mind for all of you — the current macroeconomic environment and its impact on our results,” said Muhtar Kent, CEO of The Coca-Cola Company, yesterday (17 July) as he reported the soft drinks group’s second quarter results.
In 2000, retail market researchers at Verdict called them ‘Continental discounters’, while they are known in the UK as the discount grocers. Whatever their nickname, the likes of Aldi, Lidl and Netto are all renowned for their low prices, which has generated plenty of support around the world. Hard discounters in the UK have had it tougher than in their country of origin – Germany – and many other parts of Europe where the format was quickly received and accepted into the mass grocery retail (MGR) sector. This month's briefing takes a look at the major players and reviews the latest sales data and expansion plans from Aldi, Lidl and Netto. The briefing highlights best-practice strategies that these players are taking in order to increase market share. Adopting strategies such as private-label NPD, building on economic concerns and becoming more fashionable will ensure the discounters are here to stay for now.
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