Coca-Cola Amatil will cut the price of beverages outside its core fizzy drinks range as part of a $40 million push to revive sales, as it pushes to meet its profit promise to shareholders despite a weak start to the year.
The company said on Wednesday it would pour the money into marketing, execution and equipment such as cafes and restaurants fridges.
Coca-Cola Amatil (CCA) group chief financial officer Martyn Roberts said cutting prices would help grow the company's market share of products outside of its fizzy drinks range, which have seen declining sales as consumers become more sugar conscious
"We're probably overweight in sparkling beverages, which has been declining slightly, and underweight some of those categories that we really want to accelerate our investment in," Mr Roberts said.
"Areas like dairy, areas like tea, areas like juice where we need to be more competitive is where we really want to target those price investments."
CCA sells the FUZE iced tea, Barista Bros iced coffee and Minute Maid juice brands, as well as a range of bottled water and alcohol products.
Australian drinks sales was a soft point in CCA's half-year results, released in August, with fizzy drink volumes down 3.8 per cent amid discounting from rival Pepsi, and bottled water sales falling in the face of supermarkets pushing their own home brand products.
The company, which is listed on the ASX but 31 per cent owned by The Coca-Cola Company and has the licence to bottle and sell its products in Australia, Indonesia and the pacific islands, saw earnings in the domestic business fall 13 per cent compared to the same period a year earlier.
That sent underlying earnings for the whole business down 4.3 per cent to $312 million and net profit down 4.1 per cent to $190 million.
Despite the tough first half, CCA on Wednesday re-affirmed its guidance for underlying net profit to be "broadly in line" with its 2016 result.
Mr Roberts said its Australian performance had improved in the second half, putting it on track to meet that guidance.
"But we still want to go harder, and that's why we're accelerating our investment in the Australian business so we can continue to improve it," he said.
The company did warn however that its near term earnings would be hit by the $40 million of spending to come in 2018. That money cost-savings being reinvested in the business. CCA also said it was not clear what impact NSW's new container deposit scheme would have.
"Despite these impacts, we remain committed to our target of mid-single digit earnings growth per share in the medium term," cheif executive Alison Watkins said.
"Delivery will depend on the success of revenue growth initiatives in Australia; economic factors in Indonesia and regulatory conditions in each of our markets."
CCA said on Wednesday it was pushing the international arms of its business and in Indonesia, where executives are visiting with a group of investors, had struck a deal to expand its Grinders coffee business through a partnership with machine-capsule company Caffitaly.
"We are very excited to be unveiling a revolutionary new system that will bring caf??-quality coffee to the homes of Indonesians, in a single touch," Ms Watkins said.
???Wednesday's update was released after the ASX had closed. CCA's shares have fallen 25 per cent to $7.98 since April.
