Danny Celoni appointed CEO of PepsiCo ANZ

PepsiCo has appointed Danny Celoni to the role of Australia and New Zealand CEO. He will assume responsibility for the snacks and beverages portfolios, including local brands Smith’s, Red Rock Deli and Bluebird; and international brands Pepsi, Gatorade and Doritos.

Currently PepsiCo ANZ’s Commercial Director, Danny will step into the role following the appointment of former CEO, Robbert Rietbroek to Senior Vice President and General Manager of PepsiCo’s Quaker Foods North America business.

Danny joined PepsiCo in November 2016, and has more than 22 years of experience in senior sales, commercial and strategy roles and in leading large-scale businesses across multiple geographies, including 17 years with Diageo, and four years in strategy consulting.

Adel Garas, President, PepsiCo Asia Pacific, said: “Danny brings to the role a deep understanding of our customers and the Australian and New Zealand retail environments. He has been instrumental in the growth of our brands over the past 18 months and is well placed to lead the team as we chart our next chapter.”

Danny Celoni said: “I couldn’t be prouder to lead PepsiCo Australia and New Zealand. With an enviable portfolio of both home-grown and world-leading brands, and a great team of talented people, PepsiCo is in a strong position to continue to drive category-leading innovation and growth in Australia and New Zealand.”

Keurig, Dr Pepper Snapple merge to create beverage giant

Dr Pepper Snapple Group and Keurig Green Mountain have entered into a definitive merger agreement to create Keurig Dr Pepper (“KDP”), a new beverage company of scale with a portfolio of iconic consumer brands and unrivalled distribution capability to reach virtually every point-of-sale in North America.

Under the terms of the agreement, which has been unanimously approved by the Dr Pepper Snapple Board of Directors, Dr Pepper Snapple shareholders will receive US$103.75 per share in a special cash dividend and retain 13 per cent of the combined company.

KDP will have pro forma combined 2017 annual revenues of approximately $11 billion. This combination of two iconic beverage companies joins together well-known brands Dr Pepper, 7UP, Snapple, A&W, Mott’s and Sunkist with leading coffee brand Green Mountain Coffee Roasters and the innovative Keurig single-serve coffee system, as well as more than 75 owned, licensed and partner brands in the Keurig system.

Larry Young, President and Chief Executive Officer of Dr Pepper Snapple, said, “This transaction will deliver significant and immediate value to our shareholders, along with the opportunity to participate in the long-term upside potential of our combined company and attract new brands and beverage categories to our platform in a fast-changing industry landscape. We are excited to combine with Keurig to build on the rich heritage and expertise of both companies and provide the highest-quality hot and cold beverages to satisfy every consumer throughout the day.”

Bob Gamgort, Chief Executive Officer of Keurig, said, “Our view of the industry through the lens of consumer needs, versus traditional manufacturer-defined segments, unlocks the opportunity to combine hot and cold beverages and create a platform to increase exposure to high-growth formats. The combination of Dr Pepper Snapple and Keurig will create a new scale beverage company which addresses today’s consumer needs, with a powerful platform of consumer brands and an unparalleled distribution capability to reach virtually every consumer, everywhere. We are fortunate to have talented leadership teams within both companies, and I look forward to working together with the Dr Pepper Snapple team to make this combination a success for all of our stakeholders.”

Keurig and Dr Pepper Snapple will continue to operate out of their current locations and Bob Gamgort, CEO of the combined company, will be based in Burlington, Mass. The combined company will draw on the leadership teams of both companies, who will continue running their respective businesses.

Pepsi Max Vanilla

PepsiCo has introduced a new flavour to the Pepsi Max range, offering Australians a twist on the no sugar cola product.

Pepsi Max Vanilla is on shelves now and offers consumers a blend of the taste of Pepsi Max with a hint of vanilla, whilst maintaining its signature, ‘no sugar’ offering.

The new variant joins past flavours, including Pepsi Max Lime which proved successful in Australia in 2016, and has been developed to bring a new kind of vanilla flavour experience to consumers.

According to Brad Van Dijk, PepsiCo Senior Director ANZ Beverages, Pepsi Max Vanilla is set to challenge traditional perceptions of vanilla, surprise and delight its current brand fans, and convert others.

Awareness of the new product will be driven through an extensive through the line marketing campaign, kicking off from end of February 2017, across TVC, digital, out of home, in-store, social and consumer activations.

The product can be purchased at independent and major retailers across the country.

Fever-Tree launches new premium cola mixer

Fever-Tree has launched its Cola variant into the Australian market, following the product’s success overseas.

Fever-Tree Cola was launched into Australia in April through an initial roll-out period in selected venues across New South Wales, Victoria and Queensland. Interested venues that came on board for the soft launch included Baxter Inn, Shady Pines and Blacksheep Bar in New South Wales, Hats & Tatts and Gin Palace in Victoria, and The Gresham and Brooklyn Standard in Queensland.

Acting Asia-Pacific Fever-Tree Brand Director Andy Gaunt says the company sees a huge opportunity for the product in the Australian market, citing the current premiumisation trend as an indicator.

“Whisky and Cola is the number one mixed drink in Australia, however while the choice of premium whisky is vast, the choice of premium Cola mixer is not there. Customers don’t get a selection to choose from, with just one major player in the market,” he said.

“At Fever-Tree we are committed to creating the best drink possible for drinkers – our mixers are specifically designed to be mixed with high quality spirits, and the Cola is no exception. It brings a much more natural flavour to a mixed drink and is the perfect balance between freshness and sweetness.”

The release of the cola marks the brand’s shift to the brown spirit space during the colder months, with a collective focus on Ginger Beer, Ginger Ale and Soda Water.

Unlike other colas, the product is created using a blend of 11 hand-selected ingredients from nine different geographical locations across the globe, including Argentine lemons, Mexican creole lime, Indonesian ‘korintje’ cassia cinnamon, fresh green ginger from the Ivory Coast and Madagascan vanilla. The combination of flavours achieves perfect balance, absent of stabilisers, artificial sweeteners and preservatives.

The cola adds to the current range of Fever-Tree mixers available in Australia in 200ml bottle four packs: Indian Tonic Water, Mediterranean Tonic Water, Naturally Light Tonic Water, Ginger Beer, Ginger Ale, Soda Water and Lemonade.

Fever-Tree is available in 200ml four packs at leading liquor outlets nationally.

CCA launches new Sprite campaign

Coca-Cola South Pacific has launched the next phase of Sprite's 'Cut Through The Heat' brand campaign, dedicated to inspiring and empowering Aussies to deal with life's awkward moments. 

The campaign kicks will include the return of the brand's distinguished ambassador, Sprite Saver, who will amplify Sprite's 'cut through' message through a number of 'refreshing' environments.

There will be a heavy focus on social media, designed to build an active and engaged community of Sprite lovers and encourage younger consumers to build a connection and affinity with the brand. 

The company said that content will be geared towards sparking dialogue around cutting through heated moments, positioning Sprite as a tool to cut through them and demonstrating how it can give consumers the confidence to keep their cool.

Donna Mulholland, Group Marketing Manager, Coca-Cola South Pacific said: "We're looking to build brand equity and increase engagement amongst consumers by capturing their interest through a series of fun and engaging executions that will be rolled out in market in the coming months. Our refreshment message also remains at the heart of the campaign as we continue to educate consumers about the product benefits."

What Might Be the Impact of an Australian Soda Tax?

What Might Be the Impact of an Australian Soda Tax?

By Howard Telford, Senior Industry Analyst with Euromonitor International

With the implementation of high profile sugar and soft drinks taxation in France in 2012, in Mexico in 2014 and Berkley, California in January of this year, the global debate concerning the purpose and efficacy of excise tax proposals on sugary beverages is inevitably moving in to other high per capita markets for carbonates.

Presently, the topic is on the agenda in Australia, a top 10 market for carbonates consumption in terms of per capita retail volume sold, and yet another country where obesity and other public health concerns are driving interest in added taxation as a potential policy solution. Fifteen years of volume and value sales data for carbonated drinks in the Australian market, published as part of Euromonitor’s non-alcoholic drinks research program, allow us to speculate on the potential impact of a soft drinks tax by considering the historic impact that price increases have had on Australian retail sales of carbonates, with a focus on cola.

COLA AS A CASE STUDY
As part of non-alcoholic drinks research published this January, Euromonitor International employed an inductive demand model to aid in five-year forecasting. The forecast model attempts to identify several measureable and statistically significant demand factors (including retail price) from historic data sets of the 80 markets researched. These factors are tested against historically available data for retail and on-trade beverage category sales, and then weighted to assist in building 2015-2019 country forecasts.

Australia-cola-sales.png

For Australia, the results demonstrate that a 1% increase in the retail selling price of regular, full flavour cola carbonates can be expected to yield just a 0.2% decrease in retail volume. Consequently, even a relatively substantial (and hypothetical) 7% increase in pricing in 2015 would yield only half a percentage point difference in expected declines: from a 6.5% forecasted reduction in off-trade regular, full-flavour cola volume for 2015, to a 7.0% reduction in 2015 under a soda tax scenario.

Discounting other factors, this finding suggests a weak relationship between price hikes and volume declines in Australian standard cola. However, this finding is simply based on observable data from the market and should not be oversimplified. 

In constant 2014 Australian dollars, retail unit prices for cola carbonates (including regular and low calorie cola alternatives) have fallen consistently over the review period – by 17% in total over 2000-14. There is greater uncertainty over the impact of a substantial soda tax in Australia, because there is simply no precedent for a substantial price shock in the Australian retail market. Furthermore, the introduction of such taxation would necessarily be accompanied by a high profile health and public policy debate in the media that may further impact consumer attitudes and behaviours towards the cola and wider carbonates category for reasons other than simple price.

WOULD THERE BE A PUBLIC HEALTH BENEFIT TO A SODA TAX?
The policy argument for excise taxation on carbonates – or similar Pigovian taxation on other products, including alcohol and tobacco – is that taxes ultimately raise prices to the consumer, driving down overall consumption of unhealthy products. The low sensitivity of standard, regular cola retail volume consumption to changes in retail price in Australia and the relative importance of other demand drivers makes it difficult to draw hard conclusions about the immediate impact such a tax might have on consumption and health.

Additionally, as a developed soft drinks market, consumers in Australia have a wealth of diet, low-calorie, zero calorie, and other non-cola alternatives to replace regular cola carbonates in their diet. In fact, Australian low-calorie carbonates have gained considerably on regular cola over the review period. Crucially, for the first time in 2014, Euromonitor’s data suggests that low-calorie cola outsold regular cola carbonates in terms of retail volume in Australia.

We know that there have been substantial declines in standard, full flavour cola (down 22% in off-trade volume over 2000-2014) and wider carbonated beverages in Australia over the recent review period. Interestingly, these declines have taken place in an environment of flat or declining prices in real terms and have been accompanied by consumer migration to low calorie cola (and non-cola carbonate) alternatives. 

Recent volume declines, independent of observable category price increases, have had an impact on sugar consumption received from soft drinks, according to Euromonitor International’s Nutrition system. In 2011, Australians received an estimated 12.62g of sugar per capita, per diem from cola carbonate beverages. By 2014, this figure has fallen to 11.83g of sugar per capita, largely as the result of a 3% decline in cola carbonates retail volume over that same period. The amount of per capita, per diem sugar from cola carbonates is expected to fall to 10.28g by 2019, independent of excise tax legislation.

IS A SODA TAX NECESSARY?
It may be worth considering whether consumers in Australia – and indeed in many developed markets – are addressing well publicised concerns about the category by exiting cola for other alternatives, independent of price considerations and motivated instead by health or taste considerations.

There is a weak observable relationship in historic volume data between cola consumption and price in Australia. This is primarily because there is little precedent for substantial price increases in retail cola, supported by a strong consumer expectation for discounting that has kept the price environment in the category flat or declining. It may be the case that a substantial price shock could have a disruptive and unexpected impact on consumption. However, even in a low price, discount oriented environment for full flavour cola, volume sales have declined substantially as consumers migrate to alternative beverage categories, including low-calorie colas (led by the brands Pepsi Max and Coca-Cola Zero).

Cola consumption (regular and low-calorie) is expected to decline by 9% over 2015-19, with regular, full-flavour cola expected to decline by a staggering 25% in just five years, independent of any tax increase. Consumption of total carbonates is expected to decline by 5% in retail. 

While soda taxes will gather political and media attention as a response to public health issues across food and beverages, it is worth considering whether consumers are already responding to health concerns in their soft drinks, largely independent of price considerations. Regular standard cola carbonates in Australia have declined, to the benefit of low-calorie alternatives, with a positive impact on per capita, per diem sugar consumption.

Australia-Cola-forecasts.png

It is therefore worth wondering whether sugar and soda taxation proposals are seeking to address a health question to which the The chart above demonstrates this point clearly. In light blue, we have an industry demand model forecast estimate built only on core economic factors that influence consumer goods: population growth, average income growth, price and habit persistence (a lagged effect of growth in the previous year). If these factors alone were used to predict growth in Australian cola, a flat performance might be expected over the next five years. However, in dark blue, the actual published Passport forecast shows a CAGR of -5.4%, in stark contrast to the -0.6% CAGR expected by the industry demand model.

The consensus forecast is revised down by 4.8 percentage points to account for unmeasured factors outside the demand model, most prominently rapidly changing attitudes to health, sugar and lifestyles. These consumer-led factors are expected to be the driver behind declines in the Australian cola category. It is therefore worth wondering whether sugar and soda taxation proposals are seeking to address a health question to which the Australian consumer has already found an answer. consumer has already found an answer.

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