I used to be optimistic about Coca Cola for its brand, marketing , and of course the taste of Coca Cola. However, all the catalysts have pointed out the future trend is healthier and less sugar. It is reflected in the decline in the overall soft drink in most of the developed countries. Exacerbating the problem, the current tight-budget and economic uncertainty has prompted most of the consumers to be price-conscious and cut off unnecessary spending, while Woolworth and Coles promotes their own brand(low price) of Cola to compete for the market.
From my point of views, the following problems need to be resolved before Coca Cola Amatil can be profitable again, otherwise the value of the company will decrease, until take-over occurs.
1. The flagship product, Coca Cola needs to be healthier. (Possible)
2. The ability to differentiate Coca Cola from cheap competitors. (extremely difficult in economic uncertainty)
3. CCA will "focus hard" on diversification of product lines to reduce its reliance on Cola to at least less than 30%. (feasible! but the Coca Cola parent company still focus on persuading/marketing the customers the rich history of Coke, I dont think marketing an undesirable product will turn into sale. A lot of time, Brand value does not translate into sale)
4. Making Coca Cola cheaper than its private label competitors from Woolworth and Coles (extremely difficult.By selling Cola at discount, there's little profit to be gained and its brand value/premium price advantage is gone, then share price should decrease further)
some thoughts.
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