Australia’s largest supermarket has decided not to stock Coca-Cola Amatil’s (CCA) new no-sugar option, placing a cloud over the FMCG giant’s biggest product launch in over a decade.
Woolies’ decision, first reported by the Australian Financial Review this morning, was followed by a subsequent revelation that Domino’s Pizza would be moving its carbonated soft drink and water contract to competitor Pepsi/Schweppes.
The supermarket giant has stated that consumers already have ample choice when it comes to low-sugar soft drinks, including Coke Zero, which CCA plans on phasing out in 2018 after cementing Coke No Sugar in the market.
IBISWorld senior industry analyst Samuel Johnson said Woolies’ decision reflects increasing competition for soft-drink shelf space as water becomes more popular, but noted that the giant will likely change its tune once Coke Zero is phased out.
“There’s already plenty of low sugar options available,” Johnson said. “There’s strong competition for soft-drink space as people are moving away to water and other beverages.”
“Because they plan to phase Coke Zero out entirely it’s likely that [Woolworths] will eventually take on Coke No Sugar.”
CCA is investing heavily in Coke No Sugar’s Australian product launch, having announced plans to distribute 2 million free samples to customers.
Woolworths major competitor Coles has already confirmed it will stock the product, but Johnson doesn’t think the launch will save CCA from broader consumer shifts away from soft-drinks.
“[Coke No Sugar] may provide a very short-term boost … but while consumers are looking for low sugar options soft drinks are still widely perceived as unhealthy,” he said.
The loss of a multi-million dollar contract with Australia’s largest pizza company, Domino’s also caused headwinds for CCA this morning, prompting investors to send its share price down 2.7 per cent to $8.97 by early afternoon trading.