Coca Cola Amatil, the Australian bottler and distributor of The Coca Cola Company (KO) has announced that it will go ahead with the reconstruction of the bottle manufacturing and filling operation at its Woolston plant in Christchurch, New Zealand. The bottling operation is expected to adopt a state-of-the-art technology called ‘Blowfill Technology’ that is expected to cost $15 million.
The plant at Christchurch had been badly destroyed in an earthquake in February due to which Coca Cola Amatil had shifted its operations to Auckland. Considering all factors, the company has decided to restart its operation in its old plant as well. While structural repairing is underway, the plant is expected to begin operations in next six weeks.
The plant will manufacture beverages for the south Island and some parts of North Island. The Blowfill technology helps “blow” a PET bottle while on the production line and then automatically fills it with beverage. The production line will be able to produce up to 16,000 filled bottles an hour.
The city officials feel that the revival of the plant even after such massive destruction by the earthquake comes as good news. It injects confidence into the local workforce as well as stimulates the other businesses in the city.
Coca Cola Amatil is the largest non-alcoholic beverage company in the Pacific Rim. Coca-Cola Amatil has five production plants, two in Auckland, two in Christchurch and one in Putaruru. It has three distribution centers in Auckland, Christchurch and Palmerston North. Its Woolston site has two production lines; one produces carbonated soft drinks and the other post mix syrup. The carbonated soft drink line at Woolston is the one to be upgraded to Blowfill technology.
Coca-Cola Amatil has extended its agreement with Beam Global Spirits and Wine by 10 year to further expand in Australia, following the first deal in 2007. Coca Cola Amatil will be responsible for manufacturing Beam’s ready-to-drink products, as well as the sales and distribution of the Beam Global Spirits and Wine portfolio in Australia. The deal is expected to contribute an additional $700 million to the revenue of the company.
The Australia-based company was founded in 1904 and Coca Cola holds a minority interest in the company. It is one of the “Coke bottlers” of Coca Cola around the world.
We are encouraged by The Coca Company Company’s portfolio of globally recognized brands, including Coke, Diet Coke, Fanta, Sprite, Minute Maid and its various productivity initiatives to streamline its cost structure and boost profitability. However, the company’s sluggish volume trends in matured markets of North America and Europe and its strong competitors like Dr Pepper Snapple Group, Inc. (DPS) and Pepsico, Inc. (PEP) concern us.
Currently, we maintain a ‘Neutral’ rating on the stock. Further, Coca Cola holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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