Coca-Cola Enterprises sets out innovation platform after Q1 sales dip

By Anne Bruce

- Last updated on GMT

Net sales down 13% in Q1
Net sales down 13% in Q1

Related tags: Coca-cola company, Coca-cola

Coca-Cola Enterprises, the Western European Coca-Cola bottling giant, reported a net sales decline in the first quarter and plans to innovate with Coca-Cola Life and Finlay to restore growth.

CCE said that during the first quarter, the company continued to work through difficult marketplace conditions “in a soft consumer environment.”

Net sales were $1.6 billion, down 13% on a reported basis due to unfavourable exchange rates, or up 4% on a currency-neutral basis; comparable volume grew 1%.

Operating income was $158 million; comparable operating income was $165 million, down 15% or up 4 % on a currency-neutral basis.

After posting the results John Brock, chairman and CEO fielded a suggestion from broker Nicolas Ceron of SocGen that the Coca-Cola Company was putting its innovation through the company Innocent, which Coca-Cola Company took over last year, rather than CCE.

Innovation pipeline

“I would say we are very happy with the innovation pipeline that the Coca-Cola Company has put together. If you look at what we've been doing over the past 18 to 24 months with innovation, particularly last year or last 12 months, some very exciting things. Again, that we're very pleased with whether it's smartwater or Coca-Cola Life or Finley a very robust innovation program.”

CCE had “a variety of conversations with them about opportunities of working together”,​ he said and “at some point I think it's entirely possible that we might conclude that there's something there for us to do together.”

And Manik H. Jhangiani, chief financial officer said CCE was talking to Coca-Cola Company to rework their current trading agreement, to deal with factors such as time lag issues.

Expansion plans

CCE highlighted expansion plans on April 30, both on products and geography.

Brock said that to compete effectively: “It was increasingly important to continue to expand our portfolio to seize growth opportunities.”

CCE was also working on Coca-Cola Zero, which was one of its fastest-growing products and Coca-Cola Life, which has now been introduced in all territories, he said.

Coca-Cola Life performed in line with expectations.

CCE continued to expand the distribution of the smartwater product within Great Britain and gained share within the water segment.

And it continued to build and expand Capri-Sun, which had solid volume growth of 7% in 2014 and “was off to an excellent start in 2015.”

Brock also clarified the company's position on expanding in developing countries over developed markets.

Developing markets

“Having some sort of investment in a developing market is definitely something that we would consider at the right moment in time, the right bottler, the right price.”

Mergers and acquisitions tend to be opportunistic as opposed to totally strategic, he added.

“We've got a lot of management team experience here with developing markets and we understand that the core competencies that would be needed are pretty substantially different. So if we did that, we would only go into it with our eyes wide open.”

CCE's 2015 marketing plans includes commemorating the 100th anniversary of the contour Coca-Cola bottle with the introduction of a new 500 ml PET package featuring an embossed Coca-Cola logo, a larger label, and a red cap.

It is rolling out a new One Brand strategy, which will bring a common identity to its Coca-Cola trademark portfolio. Every Coca-Cola can and bottle will carry the same script and the ribbon to unify the trademark.

Coca-Cola Co produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the world. CCE is one of the largest Coca-Cola bottlers, and handles approximately 8% of the Coca-Cola system's global volume.

It serves Belgium, France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden.

Positive signals

In Great Britain there was improvement in sales as people started to go out more often than they used to do in the past two, three years, CCE said. “There are some positive signals. Not in all our countries, but for sure in GB,”​ Brock said.

A row with Tesco last year which saw Schweppes products being taken off the shelves at Tesco has been resolved in both France and GB and CCE was pleased with the outcome of the discussions he said.

In August 2014 the company announced it was forming a long-term partnership with Monster Beverage. Monster was a fast growing brand for CCE and it was going to take over the distribution of Monster in Norway.

Related news