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just On Call - Cott Corp CEO predicts end of "value destructive" pricing

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US soft drinks companies will continue to increase their per-litre prices after realising that low prices have been damaging the industry, the head of Cott Corp has said.

Cott Corp bought DSS Group in December

Cott Corp bought DSS Group in December

“Excessive periods” of very low pricing “did little for the total market volume” in the US, Jerry Fowden told analysts yesterday. “Overall, I think people have learned that that was value destructive and therefore it is better to try and approach this a different way,” Fowden said.

In full-year results released yesterday, Cott Corp saw pricing improve as the company moved to smaller pack sizes and changed its promotion strategy in big-box retail. According to Fowden, Cott reduced the time its brands were available for US$1 per two-litre bottle or $3 per 12-pack of cans from 90% in Q3 to 50% in Q4.

“I think that is an appropriate strategy for the consumer, for retailers and for the industry,” he said. “Therefore, I would imagine that is more than likely to continue.”

Cott Corp is looking to stabilise its US business after declining demand for CSD's forced the company to diversify its portfolio. In December, it completed a US$1.25bn acquisition of DSS Group, which owns the direct-to-consumer provider of bottled water, office coffee and water filtration services DS Services of America.

In this week's FY results, profits dropped, but Cott ended the year with a strong Q4.


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