labels: Stock markets - world, Soft drinks
Coke buoyant on growth; to focus on beer segment news
23 May 2009

Australian beverage major, Coca-Cola Amatil (CCA), is expecting high single-digit growth in earnings before interest and tax for the first half of the current year, brushing aside speculations that the food and beverages industry is also facing problems due to recession.

In an update at its annual meeting in Sydney on Friday, CCA chief executive Terry Davis said volume and revenue growth had been strong in Australia this year, even though people were drinking more at home and less at restaurants and cafes.

Davis also said that the company is pursuing a strategy of intense growth in the beer segment through its partner SABMiller.

"With our organic growth strategy in beer... we're not concerned how long it takes us to get a bigger presence in the Australian beer market. We're taking this gradually," Davis said.

Amatil's market share in the premium beer category rose to 8 per cent through its Pacific Beverages joint venture with global brewing giant SABMiller.

The company's A$120 million expansion at its Bluetongue Brewery on the Central Coast will be finished by March, Davis said, adding that Amatil would consider aggressive competition for tap beer sales once the expansion was completed. About 30 per cent of Australian beer is sold on tap.

CCA last month rejected a takeover proposal from Australia's second largest brewer Lion Nathan, which itself now is being acquired by its largest shareholder, Japan's biggest drinks maker, Kirin Holdings Co.

The deal was primarily objected by CCA's majority shareholder, The Coca-Cola Company.

CCA chairman David Gonski refuted media reports suggesting tension between Amatil and Coca Cola.

''Contrary to what some have suggested, the fact that we cannot compel them to sell or dispose of their shares does not mean that we should have a bad relationship or indeed that it should affect the second part of the relationship (as a supplier),'' said.

''It is their right to deal with their shares as they wish and as I mentioned previously, this is what they did in relation to the Lion Nathan proposal.''

"It is not necessary to go out and make a large acquisition just for the sake of making a large acquisition. We're very comfortable," Davis said.

He, however, didn't rule out buying Coca-Cola bottling licences in Malaysia and Singapore in the future.

"There is strong logic for beer and soft drink businesses to be together, but this business is not for sale," Davis told reporters.

The company focuses on organic growth, rather than acquisitions, he said. He was also silent on the recent newspaper reports that Fosters is planning a merger with CCA.

Davis, said production costs had risen by 5 per cent in most places, including Australia, and at a double-digit rate in Indonesia, but price rises had compensated.

Davis said Amatil was gaining share in the fresh juice market and expected to do the same in flavoured milk when it rolled out its Goulburn Valley products to the eastern states this year, creating an Australilan national brand.

He said volume growth in soft drinks was commendable despite deep discounting in supermarkets by rival Pepsi, now owned by Asahi.

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Coke buoyant on growth; to focus on beer segment