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Coke vs Pepsi - Some Perspective, page-6

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Amused observer

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30/12/14

14:59

Post #: 14518796
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Originally posted by daylef ↑

I have to admit to getting frustrated at some of the dialogue written here sometimes as I'm sure people try to guess what's going on rather than act on fact.

Gillysrooms. Comparing Coles and Woolies brands to CCAs is a nonsense. You are comparing apples and grapes. If you think it's a good comparison ask them how the sales volumes compare. As in any product the margins are driven mainly by cost not greed. I doubt CCA would have anything to do with what the small retailers charge for their products other than to give them an idea of what will yield a reasonable profit over volume. Standover tactics? Are you serious? Sure the big guys must get reduced prices but that reflects on the volume that they buy. That is simply good business.

Again, it's a simple equation. CCA have 5 major plants in Australia and a couple of smaller ones. In WA they produce 180 million litres of product a year in a very sophisticated production plant that they spent many millions on recently in an effort to reduce overheads. If WA has 11% of the Australian population and if the volume is proportionate, that's about 1.6 billion litres per year Australia wide. To produce that volume is no small undertaking and if CCA has say 70% of the market share (and I'm sure it's close) that means the "rats and mice" (P&N etc) have to pick up 680 million litres. So lets just imagine that P&N has 20% of the market share (that is generous I suspect) that's about 440 million litres. Do you get where I'm going here? To get several plants to produce 1.6 billion from those that will do 440 million litres simply doesn't stack up unless you're prepared to spend about $700 mil (at a conservative guess) and to be quite frank, the Australian market wont support it given the undeniable brand loyalty with CCA products. Asahi are beer producers and P&N (owned by Asahi) is infinitesimal in volume and profitability to them, but they are prepared to have a go, just like Lyon Nathan before them who failed miserably.

So where's the problem? One of the biggest issues as I see it is the "do gooders" who are trying to prevent me from having free choice. If I want 3 hamburgers and a bucket of chips followed by 3 litres of Pepsi (it has a higher sugar content than Coke) for breakfast every day then that's my choice. I know it's not going to be good for me in the long term because my late mum taught me to eat well (unlike parents of today I might strongly add), but it's my choice. I don't need some shiny bummed bureaucrat telling me I'm going to die early because I drank a can of Coke but that is the fear mongering that they portray. Sure, if you drink 5 litre of Coke per day you're an idiot, but my occasional 375ml can isn't going to hurt me. What we need less of, is the food police.

Back to the competition and it is a good thing provided it's sustainable. P&N are certainly the biggest competition and a force to be reckoned with. But for them to get bigger they need to increase their market share and their volume capacity. So it's a matter of chicken or egg, but in the mean time, the competition isn't the main issue as I see it.

I have held for a very long time and been happy to take the dividends. I see CCA re-emerging but slowly. So at this time, I fear not.

Now I can get off my soap box

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Agree, except the change of CCL leadership last year left me uncomfortable. The price since has reflected my fears so we were lucky we ejected any interest and it was luck and a combination of seeing what had happened to GNC under the same leadership.

CCL Price at posting: $9.30 Sentiment: None Disclosure: Not Held
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