The Real Adult Thing
The company said as part of its strategy it would grow its share of non-alcoholic drinks by expanding its products and broaden the beverage portfolio into the highly profitable alcoholic beverages market in Australia and New Zealand.
For the next five years, the company needed to develop market leading brands and ensure national manufacturing and distribution were efficient, said CAA's group managing director Terry Davis.
As a result of the review, the majority of new capital allocation would be directed towards Australia and New Zealand where CCA's business was strongest.
"CCA will take a fundamental change in the direction for the Australian and New Zealand businesses, shifting from aiming to provide our customers and consumers with a non-alcoholic beverage for every occasion to a beverage for every occasion," Davis said.
It comes after the company began expanding its business into non-carbonated beverages and food six years ago to broaden its business base and achieve a better balanced and more profitable business mix.
Revenue from non carbonated drinks has grown from 5% to 32%.
"The Australian beer market is one of the most profitable in the world, generating earnings in excess of $1 billion, and we are aiming to become the clear number three player in the Australian beer market by the end of 2012," Davis said.
"Alcoholic beverages, in particular, beer, spirits and alcoholic RTDs provides a natural extension to CCA's product offering in Australia and New Zealand as it enables us to leverage the scale and efficiency of our sales, distribution and manufacturing infrastructure with SABMillers marketing and technical brewing expertise in a highly profitable market segment."
Following the review, the company also said it would investigate ownership options and arrangements with The Coca-Cola Company for the South Korean business and develop Indonesian markets, Papua New Guinea and Fiji.
A major IT infrastructure development to re-engineer business processes would be launched.
Davis said there still were more opportunities for expansion in the non-alcoholic beverages area.
To complement the non-alcoholic beverage brand portfolio, CCA would accelerate the development of Pacific Beverages, the joint venture with SABMiller, in order to develop a material new earnings stream for the business.
CCA would fast track the feasibility study for an Australian brewery development with recommendations expected by the end of 2007.
Davis said local manufacture of selected premium beer brands as well as the development of new domestic brands could provide an attractive and logical sequence for the development of CCAs Australian beer business.
With respect to CCA's non-Australasian assets, CCA remained committed to growing its Indonesian business. But it was "reassessing" structural and ownership options for the South Korean business.
As part of the infrastructure development, $65 million would be spent on software, infrastructure and re-engineering its businesses processes to develop a world class operating system.
CCA estimates that its 50% share of the capital outlay to deliver on its objectives could range from $A100 - $125 million (US$83.5 - 104.4 million).
From the April 23, 2007, Prepared Foods e-Flash