Investors have hammered Coca-Cola Amatil on Friday after a double-shot of bad news the day before.
On Thursday it emerged that not only did supermarket giant Woolworths decline to stock its new sugar-free drink, but pizza chain Domino's was switching its beverage preference to Pepsi as part of a cost-saving drive.
More BusinessDay Videos
- Video duration
- 00:52
Coke's latest sugar-free drink
Coke's latest sugar-free drink
Coca-Cola introduces No Sugar, the latest offering in the company's sugar alternative drinks.
Up Next
Are we set to see the next 'taper tantrum'?
- Video duration
- 03:21
- Video duration
- 03:21
Are we set to see the next 'taper ...
Are we set to see the next 'taper tantrum'?
In a week where traders will focus on Janet Yellen’s congressional testimony and core CPI, there are signs we could be set to see bond markets drive higher financial market volatility and equity weakness. (This video was produced in commercial partnership between Fairfax Media and IG Markets).
Up Next
Jump in trade surplus makes sense: HSBC economist
- Video duration
- 03:01
- Video duration
- 03:01
Jump in trade surplus makes sense: HSBC ...
Jump in trade surplus makes sense: HSBC economist
HSBC economist Paul Bloxham says the lift in commodity prices will lead to a growth in wages later this year.
Up Next
Tesla to build world's largest battery
- Video duration
- 01:37
- Video duration
- 01:37
Tesla to build world's largest battery
Tesla to build world's largest battery
Elon Musk's Tesla will be installing the world's largest lithium-ion battery storage project in South Australia. Video courtesy ABC News.
Up Next
ASX winners and losers - a snapshot
- Video duration
- 00:43
- Video duration
- 00:43
ASX winners and losers - a snapshot
ASX winners and losers - a snapshot
The stand out listings traded on the ASX captured at key moments through the day, as indicated by the time stamp in the video.
Up Next
Coca-Cola earnings report
- Video duration
- 00:34
- Video duration
- 00:34
Coca-Cola earnings report
Coca-Cola earnings report
Coca-Cola Amatil has announced it will close its South Australia manufacturing plant after posting a drop in annual profit.
Up Next
Unions rally against penalty rate cuts
- Video duration
- 01:13
- Video duration
- 01:13
Unions rally against penalty rate cuts
Unions rally against penalty rate cuts
The Federal Court has heard a legal challenge to cuts to penalty rates lodged by the Hospitality union United Voice.
Coke's latest sugar-free drink
Coca-Cola introduces No Sugar, the latest offering in the company's sugar alternative drinks.
The company's share price had fallen by more than 5.6 per cent to $8.44 by lunchtime on Friday following a dip of more than 3 per cent on Thursday. The price rallied to finish the day down 2.7 per cent at $8.67.
Morgan Stanley analysts described the loss of the Domino's contract as a "turning point", even though the soft drink giant could probably weather the 1 per cent loss of revenue.
They slashed their price target for the stock from $10 to $8.
"By itself the contract loss is manageable, but given Domino's very strong brand, we think that it may provide validation to the Pepsi-Schweppes portfolio such that smaller operators are also inclined to make the switch," they said.
That was particularly so as small fast food outlets were pushing to maintain profitability in the face of rising wages, especially in the franchise sector, they said.
Macquarie Wealth's analysts were also downbeat in a note titled "Falling Dominoes".
"[Coca-Cola Amatil's]Â decision to introduce a third no sugar cola into the Australian market appears overly ambitious," the note says, in reference to the Woolworths decision which the analysts described as "unsurprising".
In combination with the loss of the Domino's contract, the Macquarie team said any recovery for the company in the second half of this year looked "unrealistic" and the next year too was now a risk for further falls.
Macquarie's team said the developments also showed up the soft drink maker for being flat-footed.
"[They are] demonstrations of [Coca-Cola Amatil's]Â over-reliance on brand Coke for innovation and the relatively stifled ability to shift the product offering with changing customer and retailer preferences," they said.
Coca Cola declined a request for interview.Â
11 comments
New User? Sign up