Tough year ahead for soft drinks firms?

By: Michelle Russell - 28 April 2011 17:28

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just-drinks has been busy this week bringing you news on the raft of first quarter results released by soft drinks firms.

Among them, we've had PepsiCo, The Coca-Cola Co, Dr Pepper Snapple Group (DPSG) and Coca-Cola FEMSA.

PepsiCo, this morning (28 April) reported a drop in first quarter profits, as did Coca-Cola Enterprises and Embotelladora Andina. The Coca-Cola Co, on the other hand, saw profits rise in the quarter, along with DPSG and Coca-Cola FEMSA.

But, while the latter firms can be pleased with their profits, all have pointed to rising costs as a potential problem heading into the remainder of 2011.

The CSD market in North America is yet to fully recover and high global commodity cost inflation and difficult macroeconomic conditions are threatening to take their toll on the top-line of these firms.

New figures show that economic growth slowed sharply in the US in the first quarter of the year. GDP slowed to an annual rate of 1.8% in the three-month period, from 3.1% in the final quarter of 2010.

Consumer sentiment is clearly still weak and spending power is being undermined by higher food and petrol prices, government spending cuts and ongoing high unemployment. Soft drinks companies could find that the rest of the year gets tougher, rather than easier.

 

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