Appalling weather in parts of Europe may have masked the soft drinks industry's longer-term economic problems, according to the head of Coca-Cola Enterprises (CCE).
The continent's rainfall in the past four months has “been the worst imaginable”, CCE's CEO John Brock told investors in a conference call today (23 July). Brock partly blamed the weather for CCE earlier today posting a 10% net profit drop in the first six months of the year compared to a year earlier.
Q2 volumes dropped 6%, but the severe rainfall makes it difficult to draw wider conclusions, Brock added.
“Clearly, there are macro-economic issues out there, consumer-fragility issues,” he said. “[But the weather has] been so bad, that it is hard to dissect all the other components.”
Better weather in the upcoming quarter will make the situation clearer, Brock said.
“With normal weather we're going to be in a much better position to decipher exactly what's going on with these other issues and to see if they really are issues, or not,” he said.
The impact of a French excise tax is also dragging performance, however, like the weather, its full impact will not be known until the end of the fiscal year, Brock said.
“There's clearly a headwind there,” said Brock. “It's not fully impacted yet, and we will have to wait for the full year, but the elasticity of our product will help.”
CCE's energy drinks portfolio, which includes Monster, Relentless and Burn, proved resilient to the firm's weather woes, posting a 16% volumes increase. Brand Coca-Cola volumes, however, declined 6%, in line with the company's overall volumes fall.
CCE is hoping for a strong Q3, with an expected bump from Coca-Cola's partnership with the London Olympics.
“We are expecting to bounce back in volumes, assuming normalised weather over the balance of the quarter versus what we experienced in Q2, and hopefully volume growth,” said company CFO Bill Douglas.
