A few people are under the impression that the coca cola mother company investment in Indonesian division of the business and as well as CCL indirectly presents the fact that Buffett finds value in the business.
1. coca cola is a major holder of CCL, so it makes sense to help CCL run the Indonesian business.
2. If Buffett finds value in coca cola, he would have started adding extra shares to his holding.
3. the fact that Coca cola now owns about 30% of Indonesian business, CCL's share in the profit from the business would reduce, if the business turns around.
4. Australia economy is depressed by decline in mining and oil/gas industry, grocery supermarket is quite aggressive with private label and cheaper products to attract ever-more price-conscious consumers.
5. trend toward healthy drink is inevitable. + the macro economic factors create trend towards private, cheaper grocery.
coca cola is both more premium-priced, and generally not considered "healthy drink"
6. I think ccl would have a hard time maintaining profit margin. By reducing its price to compete,will likely hinder profit growth.
I think until Australia improves, ccl would struggle to achieve strong profit growth. most of its revenue still comes from Australia, lower AUD would not impact as much.
CCL Price at posting:
$10.54 Sentiment: None Disclosure: Not Held
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