strong buy, page-45

The CCL water business is in decline. Firstly the supermarket's own labels now dominate the water volume sold in Australia. Secondly the overall Aust water market is at best stagnating but most likely in decline. Buying tap water for $4 per litre is a Gen X phenomenon & the trend with the younger generations is away from bottled water. CCL in recent times also brought inhouse the manufacturing of PET bottles at great capital cost to boost profit so whatever earnings improvement this generated is already in the results.

The coca cola product will always be the major earner but to grow the business they need to continue expansion into alcoholic drinks including spirits & perhaps milk based products.

A number of posters on different forums are putting the downgrade down to the new CEO clearing the decks & talking down the business to make her own performance appear better. I don't believe for a minute this has occurred but rather there has been a fundamental shift in consumer demand & CCL has been slow to respond. IMO there is more bad news to come in the next 12mths & there will be better buying opportunities in the future so I'm avoiding for now.