On another big down day for the ASX one of only a few mid-cap stocks to be above water is Coca-Cola Amatil Ltd (ASX: CCL), the Australian supplier of soft drinks to clubs, bars, restaurants and retailers across the country.
Its shares are up 5 cents to $8.73 in morning trade, but have still lost around a quarter of their value in the year to date.
However, what may be supporting the share price today the is news from the U.S. that Coca-Cola Amatil's parent company, The Coca-Cola Company (NYSE: KO), saw its shares hit highs in overnight trade not seen since 1998.
Although the U.S. business has strengthened recently, the Australian operation has lost its fizz in the face of competitive pressures, ballooning costs, and changing consumer preferences.
Much of the credit for Coke's improved performance and record share price in the U.S. market has been attributed to the marketing impact of the Share a Coke Campaign introduced into the U.S. in 2014. The campaign which encourages people to buy Coke cans and bottles by putting their names on the iconic labels has seen phenomenal success around the world.
The idea for the campaign was reportedly brain-stormed in Australia between Coke's Australian management team and the creative gurus at advertising agency Ogilvy. The idea was trialled in Australia over the summer of 2011/12 and the subsequent sales boost persuaded Coke to launch the campaign worldwide.
In Australia it was during 2012 that Coca-Cola Amatil's management team lifted prices on its key products to create a widened retail price gap with the rival offerings of Pepsi, or the home-brand products of supermarkets like Woolworths Limited (ASX: WOW).
Whether the price gap was sustainable once the effects of the marketing campaign wore off is debatable, and Coca-Cola Amatil is now expected to report two consecutive years of declining earnings for 2013 and 2014. The divergent performances of the two Coke businesses shows just how important top quality management teams are to running a business.
