Squeezing profits out of juice…Coca-Cola Enterprises is skeptical
Speaking last Thursday at the CAGNY 2014 conference in Florida, Brock told a select industry audience that CCE – in tandem with Coke in Atlanta – was always on the hunt for new portfolio additions, especially in stills, where his company only has 13% of volumes versus 87% in sparkling.
But Brock warned that the last thing CCE would do was overpay, while re-rigging the portfolio to include low and no-calorie options would happen independently with existing brands.
“Still products, juices and juice drinks are of interest. But just to frame it for those of you less familiar with the landscape of European NARTD – it is very different to North America,” he said.
Private label brand dominance
Generally speaking, European NARTD volumes are one third sparkling, one third water and one third juices and juice drinks, Brock explained.
While CCE holds a commanding share in sparkling as “far and away the value piece” Brock warned that, unlike in the US, juices, juice drinks and still beverages in Europe have “no substantial brands that play across Europe”.
“The leading brands in most countries in those categories are private label, and the profitability and the profit margins are very different to sparkling,” he said.
Water as a category was even worse, Brock said – noting CCE’s minimal position with Schweppes Abbey Well in Great Britain and Chaudfontaine in Belgium – “both great brands – principally on-the-go cold brands that make money”.
“But trying to make money in this almost commodity water business in Europe is not a lot of fun – that’s frankly why we’re not in it,” he added.
‘Most ambitious launch since Coca-Cola Zero’
Sparkling alternatives aside, April will see CCE’s “most ambitious launch since Coca-Cola Zero” – with fruit-based soft drink for 25-49 year-olds Finley rolled-out in France.
“It’s a sparkling, non-alcoholic beverage which is targeting adults. And we have a fully integrated marketing plan to support the launch of this exciting product,” Brock said.
Other 2014 innovations from CCE will include a sugar-free reformulation of energy drink Relentless and new flavors for Burn.
CCE will also expand stevia use across its Nestea offerings and introduce new Minute Maid flavors given the health and wellness impetus.
Brock told analysts that he didn’t think reweighting the portfolio towards stills would have a dramatic impact on the health and wellness situation, implying that it wasn’t a particular problem for sparkling soft drinks.
“Look at what’s going on in the UK right now – the real issue is on sugar – and the realization among a lot of experts that juices and juice drinks have just as many calories as regular soft drinks, in some cases more,” he said.
