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Coca-Cola HBC to invest in digital push as pandemic effect continue to drain on sales

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Coca-Cola HBC AG (LON:CCH), the European soft drink bottler, reported varied effects from coronavirus lockdown restrictions across its various markets and said it will continue to invest in growing its digital sales channels, as these have become an increasingly important route to market during the pandemic.

Effects from lockdowns and other restrictions were strongest across the FTSE 100 group’s more developed markets, with the ‘developed’ segment including Greece, Ireland, Italy and Switzerland mostly seeing tighter restrictions in the quarter which affected their generally higher reliance of out-of-home sales, leading to a 4.7% decline in total volumes; while ‘developing’ markets Czechia, Hungary and Poland declined by 11.4% as out-of-home also remained closed the entire quarter.

The ‘emerging’ markets segment saw an acceleration in volume growth to 14.5% on a like-for-like basis, despite a high comparative from last year, due to faster growth in Russia and continued strong results in Nigeria, and with Romania operating with very little pandemic restrictions.

In total, out-of-home sales declined 20-30% in January and February this year compared to last year, before stabilising in March as the comparison with 2020 came up against the point where many of markets went into lockdowns.

That was the point when the at-home channel became the by far main driver of sales, which has continued in this quarter, boosted by digital sales.

Although e-retail and digital commerce currently contribute a small proportion of revenues, CCH reported revenue growth in the high double digits, and said it continue to invest capital and management attention in this area, focusing on four main areas of opportunity.

These are growing demand from retail and hospitality customers to order online directly and who want 24/7 engagement; opportunities to digitise currently physical B2B routes to market through e-marketplaces; acceleration into more pure e-retail and omnichannel brick-and-click customers ; and accelerating direct-to-consumer (D2C) offers and business models to make the most from the post-COVID herding of more consumers buying online.

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