just On Call - Cott Corp CEO looks for even keel in juice category
Cott Corp said it has innovations in the pipeline
Cott Corp has said its declining juice volumes in North America could return to an even keel next year as new juice drinks pick up pace and innovations come on line.
The soft drinks maker posted disappointing year-to-date results today (1 November), with net profits dropping by 8.1%. Juice volumes fell 7% in Q3 compared to an overall North America decline in the category of 6%, Cott CEO Jerry Fowden said, citing Nielsen figures.
However, despite a tough year this year, Fowden said new customers and a growing juice drinks business mean a brighter outlook.
“I hate to get drawn on forecasts, but could we see our overall hot-fill business as flat?” Fowden said in a conference call with investors. “I can't guarantee that but that's probably the way we are looking at things at the moment.”
Cold-fill innovations are in the pipeline, Fowden said, with a recent 50,000-case test run expanded to 150,000. Cold-fill is a filling process that allows for higher density packaging and less flavour interference than hot-fill.
“We see those kind of products as part of our line up for 2013,” Fowden said. “The important thing is to get that volume and revenue moving.”
Fowden said commodity price increases have cut into margins over the past year, with pressures likely to continue into next year. He predicted a commodities inflation rate of 4 to 6%, but said Cott has covered all its high-fructose corn syrup costs for this year.
He added: “We completed corn negotiations (for next year) and have managed to offset some of the costs by agreeing to a lower conversion cost. But this still leaves higher high-fructose corn syrup costs for 2013 versus 2012.”
He also said the next apple crop from China is likely to produce similar volumes to Q2 and Q3, while 2013 will see some weather-related increases in cranberry costs and “much higher” grape costs.
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