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
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.
