Shares in Coca Cola-Amatil fell to a 12 month low yesterday of $8.91 after it was hit by two lots of bad news.
It was reported that the company has lost a beverage contract with Domino’s Australia’s largest pizza, while its latest no sugar drink has been rejected by the country’s by Woolworths, the country’s biggest supermarket chain.
The 33%drop in price took it to a level it hasn’t seen since July 2016. The shares are also down 17% from the most recent high of $10.92 reached at the start of March.
Domino’s Pizza dropped Coca Cola-Amatil in favour of Pepsi/Schweppes.
Analysts at Deutsche Bank reckon the loss could hurt CCA.
“While some of the costs associated with servicing the Domino’s account may be able to be removed, a three per cent volume hit is meaningful," the analysts said in a client note.
The move by Domino’s to Pepsi will happen in September, with the new contract running for several years.
Meanwhile Woolworths confirmed it is not stocking the new Coca-Cola No Sugar drink that CCA introduced in June to replace Coke Zero. "We have taken the decision to not range this product at this time," a Woolworths spokesman said yesterday.
"Our customers looking for a no sugar or low sugar cola option have ample choice already in the category across a range of different pack sizes and formats."
A Coca Cola-Amatil spokeswoman said the new drink will still be on thousands of supermarket and convenience store shelves. “We’re entirely confident that Coca-Cola No Sugar will be a huge success.".
Consumers are increasingly favouring healthier options like bottled still and carbonated water.
This is a big deal for the company and ist shareholders because its Australian beverage operations are the core of the company. To lose around 3% of volume a year will have a big impact on revenue and profits. The lack of access to Woolies shelves will also hit Australian volumes.
