Coca-Cola HBC tracks shifts in consumer preferences

Publishing its 2015 Integrated Annual Report, Coca-Cola HBC says a diverse beverage portfolio has helped it satisfy changing consumer preferences over the year.

Juice, bottled water and no- and low- calorie beverages all showed notable growth in the year, it adds.

‘Post-crisis new normal’​

Coca-Cola HBC has sales of more than 2bn unit cases – or 50bn servings – each year. Headquartered in Switzerland, it operates across 28 countries, reaching 594m people.

The company has the most diversified territory in the Coca-Cola system, with no one country dominating its portfolio. It covers established markets (including Austria, Ireland and Greece), developing markets (including Croatia, the Czech Republic, and Poland) and emerging markets (including Nigeria, Russia and Ukraine).

Coca-Cola HBC says economies in its markets are ‘adapting to a post-crisis new normal,’ which in turn impacts on consumer habits and the competitive landscape.

“The global financial crisis seems to have led most countries to adjust to a rate of growth lower than pre-crisis levels, albeit with uneven trends,” ​says Coca-Cola HBC in the report.

“Established and developing markets are facing relatively high unemployment and deflation while emerging markets are impacted by lower oil and commodity prices and high currency-related inflation. Disposable income and corresponding household expenditure continue to be lackluster. ​

“The outlook for 2016 is positive, with expectations for growth exceeding 2015 levels and improvements anticipated in terms of both inflation and disposable income.”​

Still drinks now make up 31% of volumes​

One change Coca-Cola HBC has seen is people trading shopping trolleys [carts] for smaller baskets with fewer items.

“Economic conditions and evolving market dynamics have impacted consumer behaviour, leading to a shift to top up urgently needed items, rather than stock up,” ​it observes.

It also reports greater demand for low- and no- calorie beverages in 2015. The focus on health and wellness continues to gain ground, both with consumers and governments.

Offering increased choice is one of the ways to address changing market conditions, it says.

“We have one of the most diverse product portfolios among Coke bottlers, and we have consistently increased sales of low- and no-calorie sparkling beverages,” ​it reports.  ​

“We have also expanded our product portfolio to include water and juice brands to offer consumers options to support active, healthy lifestyles. ​

“Still drinks have increased from 10% of our volume in 2001 to 31% of our volume in 2015.”​

Focus on juice, water and low calorie beverages​

Coca-Cola HBC saw growth of 8% in juice in 2015, despite flat overall sales for the industry in 2015.

“The juice part of our beverage portfolio provides consumers with a nutritional and delicious refreshment proposition, which contributes to our revenue growth. With a series of great brands we are now the second largest juice company in our territory,” ​it says.

“Our success in juice has been supported by our focus on consumers’ breakfast occasion, harmonizing our portfolio and brand approaches, and developing the scale and profitability of Cappy Pulpy, which has now been launched in 14 European countries and in Russia and Nigeria.”​

Meanwhile, low- and no- calorie sparkling drinks, which account for 7% of Coca-Cola HBC’s portfolio, contributed 25% of additional cases sold.

Coca-Cola HBC says its water business experienced a significant turnaround in 2015, growing 4.7% (volume), partly thanks to a warm summer in parts of Europe.

“By the end of 2015, we had become the third-largest water business in our territory. The role of water in our portfolio is to offer a pure hydration proposition to all our consumers, through an increasingly efficient infrastructure, a lean route-to-market and contributive SKUs. ​

“This is driving our market share in the non-alcoholic ready-to-drink category. In 2015, we strengthened brand equity by introducing a master brand approach under a powerful marketing platform across Central and Southern Europe. ​

“We also relaunched our key premium brands in Austria and Switzerland while securing improvements in availability and affordability across our countries. In line with our strategy to expand in the still drinks category, we acquired Neptunas, a sought-after water brand with 20% share in Lithuania.”​