Coca-Cola to invest $500 mn in Indonesia to expand Amatil
30 Oct 2014
US giant Coca-Cola is investing $500 million to help expansion in Indonesia of Australia's Coca-Cola Amatil (CCA).
Drinks supplier Coca-Cola Amatil had won the support of its global parent to strengthen its thrust in Indonesia.
CCA also has plans to launch a new naturally sweetened product, Coke Life, in Australia and New Zealand as part of a big marketing push to lift Coke's image and sales.
According to the company's expectations the new initiatives would bring falling earnings to an end and return it to mid single-digit earnings growth over the coming years.
The new plans have evolved from a strategic review launched in May even as trading conditions and changing consumer tastes posed challenges.
Profit fell 16 per cent in the first half of 2014, and according to the company's announcement in August it aimed to cut costs by $100 million in Australasia over the next three years.
According to managing director Alison Watkins, with a population of over 240 million and a fast-growing emerging middle class, Indonesia was a key growth market for CCA.
According to analysts, CCA was attempting to appeal to more consumers in Indonesia by launching lower priced products in a wide range of packages, and needed higher level capital investment to meet demand.
Watkins, said the deal would strengthen the company's market position in Indonesia. ''With a population of more than 240 million and a fast-growing emerging middle class, Indonesia is a key growth market for CCA,'' she said in a statement.
According to Coca-Cola International president Ahmet Bozer the investment by his company would allow it to capture the growth opportunity in one of the largest and most dynamic countries in the world.
Watkins outlined results of the company's strategic review which started in May amid challenges of declining earnings and tough trading conditions.
CCA said in August it would strip $100 million from its operations after its half year profit plunged almost 16 per cent.
Following the review, the company had rolled out a new summer marketing campaign aimed at ''bringing back the magic'' of Coca-Cola soft drinks.
It also planned to introduce a number of products in April 2015 as also new digital technology platform.
