March 9/Toronto/BMI Americas Food and Drink Insights -- Canadian private label soft drink specialist Cott has posted rising sales for its latest financial year. In the 12 months to December Cott registered a 7% increase in recoded volumes, with the results boosted by the acquisition of juice maker Cliffstar in August 2010. On an organic basis (excluding the impact of Cliffstar) volumes were up by 1%. Revenues were up by 13% to $1.8 billion but declined on an organic basis by 1%. During the fourth quarter Cott's sales growth accelerated, with volumes up by 20% (4% excluding Cliffstar) and revenues up by 37% (3% excluding Cliffstar). The results continue to point to a recovery for the business, which had been hampered by mismanagement and the trend away from carbonated soft drinks, and this recovery is reflected in the firm's share price, which has increased ten-fold over the last two years.
Cott's core markets are Canada, the U.S., the U.K. and Mexico, and in these regions it produces private label soft drinks for a wide variety of retailers including Wal-Mart Stores. Up until 2004, this strategy had delivered steady if unspectacular growth, but from 2005-2008, Cott's earnings started moving in the wrong direction. Cott was damaged by the trend away from carbonated soft drinks in developed markets and was also affected by an expensive foray away from its core private label stronghold. Cott has always dabbled with branded offerings but the attributes of a successful private label producer are generally not the same as a successful brand builder. The additional marketing and product development expenses go a long way to explaining the downturn in the company's profitability.