CCA eyes liquor cash cow

Coca-Cola Amatil has made solid progress over the last 12 months in expanding its operations in the lucrative alcoholic beverages sector, group managing director Terry Davis told shareholders yesterday.

At the company's 2012 Annual General Meeting, Davis said CCA had consolidated its position in alcohol over the period by renewing its sales and distribution agreement with Jim Beam and moving to acquire the Fiji Breweries and distillery from Foster's.

"We have very recently entered into multi-year agreements with Grupo Modelo, Carlsberg and Molson Coors to distribute their portfolio of premium beer brands, including the best-selling Corona and Carlsberg brands, across Fiji Papua New Guinea and the Pacific Islands," he added.

"These new agreements are all very important steps in developing our beer strategy and will complement our plans to acquire the Foster's Fiji business, strengthening our total beverage portfolio offering across the Pacific region."

While CCA is restricted from re-entering the Australian beer market until 2014, Davis made it clear that alcohol is where the company's biggest growth opportunities ultimately lie.

"The profit pool [in alcohol] of more than $1.2 billion is greater than the profit pool for non-alcoholic beverages, so it remains a logical extension for us to capitalise on our core strengths – being the manufacture, sales and distribution of beverages – into this adjacent category," he said.

In a separate trading update, Davis said CCA expects to generate about 4 to 5 per cent growth in net profit for the first half of this year, before significant items.

"Given the difficult trading and consumer environment we are pleased with the operating performance in the year to date," he said.

"Momentum in the Australian business is improving after a weather-affected summer trading period."

Source: The Shout, 16 May 2012