Blog: Soft drinks going soft?
Chris Brook-Carter | 12 July 2004
US bottler stocks have been strong performers of recent times, as the market anticipates earnings momentum deriving from an inflationary US economy and increased price leadership by the market leader, the Coke system.
So it was interesting to receive a research note from Legg Mason last week, casting some doubt on the sector's performance going forward.
The note considered whether revenue momentum for carbonated soft drinks will sustain in 2005. It did so against a backdrop of what have become widely-held market expectations of increased revenue momentum in 2004.
"We do not expect category revenue momentum to sustain in 2005 due to positive but slowing price realisation. In principle, this is a risk to bottlers' earnings growth given the low-margin nature of bottling," said Mark Swartzberg, Legg Mason's beverage analyst.
Swartzberg went on to explain that the leading regulator of rates of sector price growth is broad rates of inflation, or consumers as a group, not competitive unity or disunity.
Correspondingly, if economic forecasts are right, further inflation in 2004 will be
followed by a slowdown in inflation in 2005, suggesting a slowdown in revenue growth for carbonated soft drinks, Swartzberg said.
It would appear that the folk at the UK arm of Carlsberg have this year found the 'gimmicky' drawer in the marketing office....
It's a popular grizzle and one I'll admit to having on at least one or two occasions… a day. Why do people post photos of their food and/or drink on to my social media feed?...
After a 2014 it'll want to forget, Treasury Wine Estates has some good news....
The garden shed is usually home to some spiders, a lawnmower and a few half-empty paint tins. ...
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