The refusal by Woolworths to stock Coca-Cola “No Sugar” is all about market saturation of sugar-free soft drinks, according to industry analysts IBISWorld.
The soft drink, launched last month, is the beverage giant’s biggest product launch in a decade and will replace Coca-Cola Zero from early next year.
Woolworth’s reason: It’s customers are already swamped with choice.
Shares in Coca-Cola Amatil, whose profits are being hit by changing tastes in Australia, are down more than 2% today to $8.98.
Australians are moving away from traditional flavoured fizzy drinks and toward still and energy drinks.
“The nation’s largest supermarket (Woolworths) cited already ample low and no-sugar cola options, including Coke Zero, as its primary reason for not stocking the new product,” IBISWorld says.
“Coca-Cola Amatil launched the product in early June 2017, giving away two million cans of the new beverage. The company has also undertaken an extensive free-to-air advertising campaign.”
IBISWorld says Coca-Cola Amatil is repositioning its no-sugar cola offering to stimulate renewed demand, following a profit downgrade as prices and sales volumes have fallen for the company’s Australian Beverages business.
Its new “No Sugar” product is intended to be positioned as a healthier alternative to Coca-Cola Classic, with a flavour said to be closer to its classic cola than Coke Zero.
“Operators in the soft drink manufacturing industry have struggled with rising health consciousness as most soft drink products are perceived as unhealthy,” says IBISWorld.
Here’s how IBISWorld sees demand dropping at supermarkets as community health awareness increases:
Coca-Cola Life, which had 30% less sugar than traditional Coca-Cola, was launched in April 2015.
However, low sales resulted in this product being discontinued early this year.
Coca-Cola Amatil then released Coca-Cola with Stevia to draw greater attention to its low sugar content, which is 50% lower than its standard classic drink.
IBISWorld expects industry revenue to grow by a subdued annual 0.2% over the five years through 2017-18 to reach $4.2 billion.
The analysts expects an expansion of private-label offerings and rising health awareness to weigh on growth in industry revenue as consumers either shift to lower value products or alternative beverages.
“However, the rising popularity of higher value energy and sports drinks will likely
provide growth,” IBISWorld says.