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.
Knowledge is power, or so they claim. So, with that in mind, here's an infographic, courtesy of Australian company Hangover Revivol, that breaks down exactly what is behind the common hangover....
Here's a round-up of the top stories on just-drinks last week, featuring William Grant & Sons, the Southern hemisphere's winemakers, SABMiller and Heineken, and Coke Light....
How many beer mugs can one man carry? ...
Here's a round-up of the top stories on just-drinks last week, featuring Pernod Ricard, The Coca-Cola Co, SABMiller's new Scotch whisky and Santa Rita Estates....
- Comment - Heineken's 'No' Cuts SABMiller Options
- Irish whiskey eyes a slice of Scotch's global pie
- SABMiller spurned by Heineken: The start of the en
- Scottish Independence and Scotch Whisky
- Can the New World Learn a Lesson from the Old?
- Patron Spirits' Patron Citrónge Lime
- Heineken rejects SABMiller purchase proposal
- Wm Grant CMO to head Orangina Scweppes Int'l
- Diageo's Special Releases 2014
- SABMiller, Heineken silent on takeover offer talk