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      Coca Cola meets targets despite sugar tax

      With the year beginning with record-breaking deliverables in Q1, the Group says volumes then normalised but remained positive in Q2 and Q3.

      mm by Staff Writer
      June 21, 2022
      in Companies & Markets
      Reading Time: 3 mins read
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      Coca Cola meets targets despite sugar tax
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      • Coca Cola Net Sales Revenue closed +22.9% vs 2020
      • Upgrade of Syrup Room to increase capacity of tanks completed

      In the midst of introduction of a sugar tax on top of VAT and fuel price increases simultaneously implemented, Sechaba Holdings says in its 2021 annual report that Coca Cola Beverages did excellently to reach all its volume targets and beyond.

      With the year beginning with record-breaking deliverables in Q1, the Group says volumes then normalised but remained positive in Q2 and Q3. “A dip in momentum in Q4 deliverables did not deter a full year volume result that was +17.4 percent up vs 2020 and +7.8 percent up vs Plan,” management wrote in the annual report for 2021. It added that the growth in volumes augmented by price taking on the back of the sugar tax, Coca Cola Net Sales Revenue (NSR) closed +22.9 percent vs 2020.

      It says in 2021, the team followed 2020’s formula of protecting profitability, with a continued strong cost management view taken throughout the year. Coca Cola again gave salary increases to its employees in the year and protected jobs, but did this while continuing to pay close attention to all recruitment opportunities, operational expenses, and capital expenditure (CAPEX).

      Sechaba says volumes were driven by the dominant 2L Sparkling Soft Drink (SSD) Polyethylene Terephthalate PET pack which contributed to 62.8 percent of total sales. The 330ml and 440ml Cans’ contribution rose a significant +0.7 percent vs 2020, closing at 17.3 percent, as Can sales continue in their recovery following the struggles under the COVID restriction in trade. The 440ml Can pack, in particular, showed massive growth, closing +34.8 percent vs 2020, having a very positive effect on the year’s profitability.

      “Within the four walls of the plant, CCBB is excited to have completed the upgrade to our Syrup Room, increasing the capacity of the tanks used to feed the lines as well as the solid waste areas and have almost completed the new Waste Water Treatment Plant,” the Group states. “Further projects have been completed to ensure less water is pulled to run the entire plant. It remains a focal area to continually look for more efficient ways to use the water at our disposal.”

      Coca Cola’s sparkling portfolio continued to be the largest category in the business, contributing to 87.4 percent of total volumes for the year. The category was driven by the core Coke, Fanta and Sprite brands, with Brand Coke closing the year +14.2 percent vs plan. Though the second largest sparkling brand, Fanta, saw declines, Sechaba notes that this was offset by the resurgence of the Sparletta brand, which delivered +15.5 percent above planned volumes. “The CCBB Trade marketing team did excellently to support the sparkling category throughout the year, constantly maintaining visibility in trade through promotions and activations,” the report notes.

      After suffering from line capacity issues in Q1 2021 due to a huge spike in the volumes of key packs, Sechaba says the relief on the water line business for the balance of the year allowed for the pipeline to be filled and sales to consistently rise as the year progressed. At the close of the year, Source Water ended +24.3 percent vs 2020, but -4.4 percent vs Plan. “The hope is that this positive momentum seen in the last three quarters of 2021 can continue into the new year and drive a strong Q1 2022 performance,” says the report.

      Mazoe delivered another strong performance in 2021, driving Coca Cola’s Stills portfolio with a 63.4 percent contribution. With consistency in the availability of the popular Orange Crush flavour, Mazoe, by the close of the year, delivered volumes that were +23.0 percent vs 2020 and +13.8 percent above plan. The year 2021 was a transitional one for Coca Cola’s Juice category as the company successfully made a switch in its leading juice brand from Minute Maid to Cappy. Sechaba says the team also managed to successfully introduce a new 500ml PET pack: the low juice content “Burst” range, and at an attractive price point of P5.00.

      The Energy category performed excellently throughout 2021, growing a massive +35.3 percent vs 2020 volumes, as the category maintained its new share of the market. Sechaba says excellent gains come as a result of great work by the trade marketing team supported by strong focus from the sales front. “The impact of the marketing team’s Monster and Predator promotions and initiatives continue to show as there is a continued expectation of high deliverables into 2022,” the report notes.

      Tags: Coca Cola BeveragesCOVIDMazoeMonsterOrange CrushPredatorSechaba Holdings

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