Is Coca-Cola Amatil Ltd on a health kick?

One of the things I often see would-be Coca-Cola Amatil Ltd (ASX: CCL) investors do is comment on the company’s beverages portfolio. ‘People are getting more health conscious‘, ‘The government could introduce a sugar tax’, ‘Sugar is really bad for you’.

All of these hold some truth, though I doubt – with our busy lifestyles – that packaged drinks are going away. Amatil has benefited from its association with Coca-Cola for years, although the company is now struggling to shake off investor perceptions of it as ‘The Coke maker’.

Coca-Cola Amatil’s beverage portfolio is in better shape than many might expect. Taken from the Chairman’s address at the recent annual general meeting, Coca-Cola Amatil’s Australian non-alcoholic beverage portfolio contains 190 different formulations, of which:

  • 27% contain no kiloujoules (also by definition, no sugar)
  • A further 26% are ‘low-kiloujoule’, containing less than 80 kiloujoules per 100ml*
  • 37% have no added sugar
  • 8% recently had the sugar content reduced

*by contrast, a 600ml Coke contains 180 kilojoules per 100ml

Source: A 600ml Coca-Cola bottle I bought yesterday

Source: A 600ml Coca-Cola bottle I bought yesterday

How much healthier are they, really?

As a long-term sweet tooth myself, I use a rule of thumb that says all sweet drinks (soft drinks, juices, iced teas, flavoured milks, etc) contain 10% of their millilitre figure as sugar. Red Coca-Cola in fact contains 64 grams of sugar in a 600ml beverage (i.e.,’10.6%’). I can then assess the ‘healthiness’ of drinks by how they stack up against this 10% scale.

In recent years a number of iced teas and similar have reduced their sugar content to about 8%, or ~35g in a 500ml bottle. Even so, these drinks are well north of the 80kj per 100ml benchmark that Coca-Cola has defined as ‘low-kilojoule’.

Based on the figures provided by Amatil, it looks as though 53% of its portfolio is significantly healthier in kilojoule/sugar terms than its most iconic beverage/ the rest of the market.

Surely there’s more to the story?

Unfortunately, product sales figures weren’t provided so I have no idea if Coca-Cola is experiencing much success selling these healthier beverages. Once the company steps outside the ‘Coke’ brand, its beverages are less recognisable and operate in a more competitive market.

(I recently wrote further on Amatil’s targeting of category leadership here)

One suspects that most of the sales still come from the less healthy beverages – not least because consumers know what they like, and it’s usually not carrots and lettuce. There’s also the question of whether zero kilojoule beverages are any healthier, due to possible high levels of sodium and the presence of artificial colours, flavours, and sweeteners.

Are consumers really getting any healthier? It’s hard to tell, but having healthier products is very important in today’s media environment, and Coca-Cola Amatil has made big strides in the right direction on this front.

Still think Coca-Cola Amatil is a sell? Better sell these 3 companies first...

3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks.

Motley Fool contributor Sean O'Neill owns shares of Coca-Cola Amatil Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

HOT OFF THE PRESSES: My #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.