Coca-Cola European Partners develops alcohol strategy, drawing on learnings from Coca-Cola Amatil
Topo Chico Hard Seltzer - launched in Latin America in September and due to hit the US at the start of next year - will launch next month in Great Britain (alongside five others European markets covered by Coca-Cola Hellenic Bottling Company). It will roll out across the rest of CCEP's Western European markets in 2021.
CCEP announced on Sunday its intention to acquire Asia-Pacific bottler Coca-Cola Amatil, a bottler that already has a chunky established alcohol portfolio across its Australian and New Zealand markets. CCEP now plans to take Amatil's expertise in alcohol and apply it to the European market.
Amatil's alcohol portfolio: five years of consecutive growth
CCEP - which is the largest Coca-Cola bottler in revenue terms - has 13 markets centered in Western Europe. Its proposed acquisition of Coca-Cola Amatil will expand its geographical footprint and almost double its consumer reach.
But the acquisition will also allow CCEP to build a new strategy in alcohol: with Topo Chico Hard Seltzer November launch representing the bottler's first entry in the alcohol category.
Coca-Cola Amatil, however, has a portfolio that stretches across both non-alcoholic and alcoholic beverages: with alcohol and coffee being two focus areas. In 2019, the alcohol and coffee division – which accounts for around 10% of Amatil’s overall portfolio - reported revenue and double-digit EBIT growth for the fifth consecutive year.
The portfolio includes beer, cider and spirits: such as Coors, Blue Moon, Magners, Rekorderlig, Sipsmith Gin, Jim Beam, Canadian Club and Australia Bitters. And it has been working on building this portfolio - such as through its 2017 acquisition of Perth craft brewer Feral Brewing.
Damian Gammell, CEO, CCEP, notes that acquiring Amatil’s portfolio would open up a new world for the European company.
“While the core category for both businesses is NARTD [non-alcoholic ready-to-drink], the transaction would methodically strengthen and broaden our current portfolio, not just within that category but in the acquisition of wider capabilities in alcohol and coffee. This is already a focus area for us here in Europe as we build out our coffee business led by Costa and prepare to launch Topo Chico across our markets”
Caffeine boost
CCEP also sees synergies and growth opportunities in coffee: with Amatil’s coffee complementing its work with Costa in Europe.
Amatil’s portfolio includes Grinders Coffee and Temple Tea Co; while CCEP acquired the world’s second largest coffee chain Costa in 2019.
“Coca-Cola Amatil have been big there in coffee and will complement the work we’re just kicking off with Costa,” said Gammell.
Coca-Cola's global move into alcohol
While Coca-Cola has made headlines with its upcoming Topo Chico Hard Seltzer launch, it had been testing the waters in recent years – for example with a 2018 alcohol launch in Japan.
And CCEP has also been exploring the category in Europe – in Belgium it has entered into a number of alcohol distribution agreements to try and learn from the category.
“I think it’s certainly a category that we should continue to look at to see how it can complement and enhance our overall customer proposition,” said Gammell.
“That’s clearly something we’ve seen Amatil do well. If you look at the size and scope of their alcohol business, particularly in Australia, we believe there’s a lot of learning there, and obviously what we’d then like to do is learn and understand a bit more as we go through the process, and then challenge some of our own thinking in Europe. That’s one of the beauties of this deal.
“We can’t articulate that into a strategy yet, because that’s clearly the work we want to do as we move forward, but it’s very exciting to learn. They have a great portfolio, they’ve been in it for a while. It’s across beer, spirits, RTD alcohol – and clearly we’re doing Topo Chico in Europe – so that will be another play in that space.”
