Coca-Cola Amatil Ltd [ASX:CCL]shares are down by 8% of what they were at this time last year, with a trend towards healthy eating thought to be the cause.
The carbonated soft drink manufacturer has faced increased backlash over the last five years, on the back of such anti-sugar initiatives like the ‘I Quit Sugar’ diet movement, and 2014’s controversial health documentary, That Sugar Film.
The share price is sitting around $8.58 at time of writing.
What’s the story?
The last 12 months have seen some volatile shifts in the beverage titan’s share price, as a global audience becomes more health-conscious and the market becomes ever more saturated with sugar-free alternatives.
Less than two weeks ago, Coke Amatil announced the launch of Amatil X, a new initiative to drive revenue into entrepreneurial activities outside of the business’s core, and to better align with changing consumer behaviours.
The share price enjoyed a brief leap on the back of this announcement, but has dropped back down again. This could be in part attributed to the company’s annual report in March, which indicated that small improvements in its Australian beverages segment had failed to counterbalance market-driven challenges.
Numerous analysts have a sell rating on the stock at present.
Clearly, investors are taking heed.
What’s next for Coca-Cola Amatil?
It’s hard to deny that the household name is facing significant challenges; a move away from ‘unhealthy’ fizzy drinks, a growth in health drink alternatives, intense price competition, among other reasons perhaps not yet identified.
But Coke Amatil has been straightforward with shareholders and admitted that its near-term earnings will remain under pressure. In addition, it has defined a strategy in the form of Amatil X, that could potentially see it becoming a more relevant brand in the near future.
It will be interesting to see if Coke Amatil can manage to redeem its former success on the ASX, but many investors are choosing not to hold their breath.
Editor, Markets & Money
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