Coca-Cola Amatil announces long-term exclusive agreement with Boston Beer to distribute its Samuel Adams beer in Australia; deal begins in mid-December

Nevin Barich

AUSTRALIA , November 6, 2013 (Gold Coast Bulletin) – COCA-Cola Amatil shares have tumbled after the group warned earnings were sliding as tough competition, weak demand and inflation in overseas markets took a toll.

The beverage giant in August forecast that earnings before interest and tax for the year to December would be flat to 4 per cent below last year's $761 million.

But the group said yesterday it now expected earnings to be down 5 per cent to 7 per cent, partly due to weaker-than-expected consumer demand.

Coca-Cola Amatil shares fell 4.7 per cent, despite the group's announcement it would start marketing America's ``largest-selling craft beer'', Samuel Adams, next month in a move likely to boost revenue.

``Fourth quarter trading to date is not seeing the expected post-election uplift in consumer spending,'' managing director Terry Davis said.

``The non-grocery business has continued to grow volumes in the second half, however consumer demand has been more subdued than expected.''

His comments echo those of retail giants Wesfarmers and Woolworths, which both in recent weeks said any jump in consumer confidence after September's federal election had been short-lived.

Mr Davis said while sales of softdrinks in supermarkets had improved, aggressive discounting from rivals, such as Pepsi, had hit the group's figures.

He also warned that higher inflation in Indonesia had weighed on consumer spending in the overseas market. Despite this, Mr Davis said the Indonesian business was still expected to generate both volume and earnings growth.

The group also said reduced mining activity and investment in Papua New Guinea continued to drag down demand.

Business in New Zealand was positive as overall market conditions improved.

Coca-Cola Amatil said it was on track to relaunch itself into the Australian beer and cider market later this year.

It has struck the Samuel Adams deal with the Boston Beer Company. Coca-Cola Amatil will also sell Molson Coors beers.

Invast chief market analyst Peter Esho said: ``Normally we would back a quality name like Coca-Cola Amatil but there is something in Amatil's release that should bring caution - a more cautious tone now around Indonesia which had previously been one of its shining lights.''

(c) 2013 News Limited

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