WOW/WES have an advantage against CCL in bottled water and maybe beer. Bottled water because distribution plays a far larger role in total cost and mount franklin water would cost more to distribute given its specific source ect. Beer because WOW/WES already have a bucketload of the equivalent of homebrands in the market and CCLs brand imaging isn't as useful. It still plays an important part. just not as important.
WOW/WES don't actually produce soft drinks and their interruption to the market isn't as strong as CCA suggest. The primary fall in sales is at corner shops according to CCA (source: recently read transcript of an interview with their ceo). This tells the story. CCA is just making excuses for their problems. It would be crazy for a board to blame themselves, they wouldn't get a pay rise. The other note that I consider interesting is WOW and WES have a market advantage because they've fractionated costs by increasing market share. This can't really continue beyond the current point (there is no market share left to gain). It may reverse. I note Aldi are attempting to open hundreds of stores which may steal market share, reducing their cost savings and hence dominant position.
I'm not a believer in Alison Watkins, sadly I feel the majority of her skills lie in the ability to sell a business. A path she has already commenced at CCA and not necessarily the best outcome for shareholders. Note she left a company she sold to join a company where her first action was to sell part of the company. To me, the fact that she doesn't leave many companies without selling them is a very strong indication of what she will try to do. This is probably the biggest real risk presented to CCA shareholders...When will she sell and at what price will she sell it. This is the inevitable end game with Alison and hence the reason I'm afraid to pay more than what she may value the company at as I suspect she'll sell the whole shop for anything above her internal valuation. "for our interests" ...obviously.... I don't know if she has any other moves. Thankfully the large ownership stake of TCCC will make it hard for her to sell the company to anyone other than TCCC and I suspect they are slightly less interested in buying the whole business than you think.
With regard to company direction. TCCC look after this. It states so in their agreement with CCA. Therefore I am not concerned about Alisons ability to run daily operations and will remain unworried so long as consultant fees and management costs are kept low.
Their moat exists and despite some pretty staggering anti-coke advertising in current times it should remain. I'd look at this point in time as one of the lows in cokes brand effectiveness. WOW and WES will never compete against coke as a brand. As much as us financially interested cheap skates may buy a $0.10 can of AAA cola, the typical person will not do this.
CCL Price at posting:
$9.49 Sentiment: Buy Disclosure: Held
