Despite soft drink being one of the most resilient industry amidst the pandemic, many manufacturers however continue to suffer losses or a dip in sales during the second quarter 2020. One good example is Coca-Coca Amatil, which although enjoy steady grocery retail sales (off trade), however this is offset by poor sales in the food services segment (on trade).
Coca-Cola saw its sales plummeted in Australia, New Zealand and Indonesia amidst the lockdowns implemented in the 3 countries. Traditionally, March to June has always been a good quarter to soft drink players due to the warm season and festive periods of Easter and Ramadan.
Coca-Cola Amatil Group Managing Director Alison Watkins commented, “Our sales volumes in 1st quarter have gone down by approximately 30% as compared to prior period, with Indonesia down close to 50% and Australia down approximately 15%.”
In Australia, the company has been hit hard by another calamity, the Australian bushfires in January and February followed by the pandemic. With the lockdowns, sales will continue to be bleak through the 2nd quarter.
No doubt, off trade retail sales commanded a substantial share of Coca-Cola Amatil’s turnover, however as pubs, restaurants, cafes and hotels continue to be closed, this has taken away a huge chunk of its revenue. With the current lockdown, as consumers are advised to stay at home and not to go out or engage in lifestyle and sports activities, consumption of soft drink is expected to remain low.
With the current demand slump, Coca Cola Amatil has decided to cut costs and strengthen its balance sheet with a target of A$140 million (US$91 million) in cost savings and A$100 million (US$66 million) reduction in capital expenditure, while also consider reducing its dividends to shareholders.
Coca-Cola bubbles fizzling during COVID-19 pandemic
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