Cott amends expectations for annus horribilis

By Neil Merrett

- Last updated on GMT

Related tags: Soft drink

International branded and private label soft drink manufacturer
Cott has lowered it earning expectations for 2007, claiming it to
be one of the most difficult years in its history.

The group announced yesterday that rising commodity costs, increased promotional campaigns by rival producers, and declining sales of carbonated beverages have hit operations hard. The announcement marks continued pressure on beverage groups to turn to alternative avenues, like the decline in sales of traditional carbonated beveragem, amidst changing consumer demands. The group pointed to declines within the North American carbonated soft drink market that led to sales volumes falling seven per cent in the four weeks up to 11 August. Similarly, in the UK, cooler wetter weather throughout the year and difficulties regarding setting up a new aseptic packaging line in the country negatively affected sales of existing and new products. Group chief executive officer Brent Willis said that despite making cuts to its own operations, the company was unable to offset current market conditions. "Although we have closed manufacturing facilities and cut significant other costs, begun expansion of new products, new channels, and new markets, and taken significant pricing, these actions have not been sufficient to offset the negative impacts,"​ he stated. "As a result, we no longer feel we can meet the previously announced targets for 2007 and we expect year over year revenue growth to be flat and operating income to be substantially lower than 2006."​ Company chairman Frank Weise suggested that the company, despite continued difficulties, was expecting a turnaround for it operations during the fiscal 2008. "While the actions the Company has taken to drive the turnaround are on strategy and progressing, the short term results have been undermined by significant declines,"​ he stated. "The Board remains confident the right steps are being taken to confront the key challenges and position the Company for future growth in sales and profits"

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