Round-Up with Russell - The Week in Soft Drinks
A round-up of the week's soft drinks news
Danone Waters kicked off proceedings on Tuesday (18 October). An increase in volumes and double-digit growth in Latin America and Asia contributed to a 3.8% rise in sales for the division in its third quarter. The results however, were overshadowed by reports earlier in the day that Danone was in talks with Japan's Suntory Holdings over the potential sale of its bottled water division.
It is not the first time that Danone's bottled water unit has been the subject of sale speculation but, nonetheless, Danone's CFO, Pierre-Andre Terisse, had the job of fielding questions on the matter during the firm's earnings call. "The same rumour again and the same comment again, we have not changed our strategy with regards to water", he said.
Danone has made no secret that it sees growth potential in infant nutrition, so any speculation that it is looking to offload its water business is sure to fuel questions. And with the global water category growing at around 5%, compared to 7% growth in infant nutrition, analysts also see the value in a disposal.
On the same day, Coca-Cola released its third-quarter results. A strong top-line performance and international volumes growth of 5% drove profits up by 8% in the three-month period, ahead of the company's long-term growth targets.
A pleasing set of results for Coca-Cola's chairman & CEO, Muhtar Kent, but the ongoing volatile economic environment in Central and Southern Europe resulted in a 2% volume decline in the region. As important markets for the soft drinks firm, Kent was keen to point out to analysts on the firm's earnings call that innovations in packaging and in its still beverages portfolio will help to drive growth and market share gains in Europe going forward.
For Nestle Waters, problems in the company's North America business were highlighted in the firm's third-quarter results on Thursday. The Perrier water producer's brands came under price pressure from competitors in North America during the period, resulting in an 11.8% slide in nine-month sales.
Nestle isn't the only company to experience struggles in the shaky North American market, and commodity pressures have forced many soft drinks firms to implement prices increases in a bid to offset rising costs.
Nestle however, has remained decidedly upbeat on the market and attempted to allay analyst and investor fears this week with its forecast of improving momentum in the region.
For Britvic, its Achilles' heel - Ireland - was once again the talk of the UK soft drink firm's trading update on Thursday. The company reported a 14.6% increase in full-year group sales, but its Ireland unit faltered with a 9.6% drop in sales.
Britvic admitted that conditions in Ireland remain difficult, a different view to the one held by the company earlier in the year when, at an investor seminar in the UK, Britvic Ireland's managing director, Andrew Richards, attempted to dispel misconceptions about the low growth potential for the country.
The Republic's prolonged recession has severely damaged consumer spending in Ireland, but positive volume, price and sales growth in the company's UK, French and International business units will provide Britvic with confidence heading into 2012.
Other movements this week have included the launch of a television campaign for Coca-Cola's Minute Maid juice range in the US, and the company's partnership with Paramount Pictures for the launch a Coke Zero campaign to coincide with the release of the fourth Mission: Impossible film.
The first part of Chris Mercer's interview with Cecile Bonnefond, CEO of Societe Europeenne de Participations Industrielles' Champagne unit, ended with the Champagne veteran holding forth on the need ...
At last week's Consumer Analyst Group of Europe conference, Danone faced up to the challenges its bottled water division faces in Western Europe. Richard Corbett concurs and sympathises. But, Richard ...
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