Last week’s €28bn mega-merger of three European Coca-Cola bottlers could help drive greater brand development away from Coca-Cola’s core carbonated products.
The merger of Coca-Cola Enterprises with Coke bottlers in Spain and Germany is illustrative of a culture shift within the Coke empire and could lead to the brand stepping up its presence in non-fizzy drinks, according to market observers.
HSBC analyst Carlos Laboy commented: “The new European bottler is being formed into a changing culture at the Coca-Cola Company. Maybe they can now start focusing with greater emphasis on brand development and innovation around all kinds of liquids that don’t have bubbles and aren’t brown.”
Juices, water, dairy products, teas, energy drinks and other good-for-you products “hold growth potential if they are properly emphasised with the right model,” he added, as Coca-Cola starts to emphasise a more revenue-based model over volumes, to support future product innovation.
“If you look at the fantastic Coca-Cola platform in Europe, it’s amazing how little it generates before noon - because the morning beverage occasions aren’t really being optimally tackled.”
Carbonated drinks currently make up 87% of the total volumes of CCE, the largest of the three firms merging to form Coca-Cola European Partners, with water accounting for just 3% of sales and non-carbonated beverages 10%.
One senior City dealmaker backed the contention that Coca-Cola in Europe had failed to drive its still brands in the same way as the Coke masterbrand.
“The very country based approach Coca-Cola’s European bottlers are largely obliged to follow now impedes their ability to fulfil the potential of still drinks, especially as they’re competing with operators able to take a pan-European view,” he said.
“One of the areas where integration makes the biggest impact is being able to take a pan-European approach to driving NPD.”
Coke’s current non-carbonated brands include Oasis, Glacéau vitaminwater and smartwater, 5 Alive and Capri Sun.
The €28bn (£19.6bn) merger between CCE, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke announced last week will create a new $12.6bn (£8.1bn) Western European Coca-Cola bottler with 300 million consumers and 50 bottling plants across 13 countries.
Coca-Cola Iberian Partners’ volumes are 80% carbonated, 11% non-carbonated and 9% water. The German operation has 86% carbonates, 3% non-carbonates and 11% water.
No comments yet