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Will Coca-Cola Amatil Ltd lose its fizz soon?

Credit: Coca Cola

Shares in Coca-Cola Amatil Ltd (ASX: CCL) are down slightly to $9.29 today after a trend upwards for the stock since late 2017.

But will intense pricing pressure from competitors and overall competition across the grocery sector, coupled with a health-directed move away from fizzy drinks, start to hit the margins of Coca-Cola soon?

Morgan Stanley have this month upheld its underweight rating on the stock with an $8.00 price target, noting concerns about competition from the Indonesian beverages market with diversification key to overcoming softening in its fizzy drink segment.

Coca-Cola’s annual result reported underlying NPAT of $416.2 million in line with guidances, but trading revenue was down 2.8% to $4.93 billion while capital expenditure increased to $312.2 million from $295.7 million in FY16.

The company’s $10 million investment in start-ups could open up new opportunities as Coca-Cola inevitably searches for a new flagship product as demand for sugary drinks sours.

Also in the global beverage space Treasury Wine Estates Ltd (ASX: TWE) appear to be kicking goals, with today’s share price of $18.67 up 53% on its $12.17 price at this time last year.

Freedom Foods Group Ltd (ASX: FNP) is also going great guns with its share price up 30% in the last 12 months.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Coca-Cola Amatil Limited, Freedom Foods Group Limited, and Treasury Wine Estates Limited. 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 Scott Phillips.

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