Australian Beverages Limited
Exam case Australian Beverages Limited
Pre-seen information Semester 1 2010
Australian Beverages Limited — Pre-seen information
A. Introduction to Australian Beverages Limited — March 2010
Australian Beverages Limited (ABL) commenced soft drink manufacturing in 1937. During the 1970s and 1980s, the company expanded its beverage portfolio by entering into other non-alcoholic beverage categories, such as fruit and milk-based drinks. Entry into the snack food market was recently undertaken in response to declining consumption of carbonated soft drinks (CSDs), the company’s traditional area of business strength. This move also enabled ABL to leverage its strong distribution capabilities to supermarkets, convenience stores and hospitality channels by adding adding such complementary food products to non-alcoholic beverages. Nevertheless, CSDs still accounted for 90 per cent of company revenue in 2004. Tom Dwyer, the current managing director, has been with the company since 2005. He joined the company at a time when CSD growth was stagnating and shareholder confidence in the company was waning. This had resulted in the share price declining by 15 per cent in the two years prior to his appointment. In order to restore shareholder confidence, Dwyer established a strategic planning team within the company to assess the current product portfolio and identify organic and acquisition growth opportunities. From this review the importance of operational excellence was identified and strong investment was made in world class manufacturing facilities and systems. Process re-engineering was implemented to reduce costs of manufacture and time to market. Having finalised the integration of a snack food business acquisition just over 12 months ago, Dwyer is now aware that he needs to identify further growth options given predicted continuing decline in the CSD market. In January 2010 he asked the strategic planning team to undertake another detailed review of opportunities for
Pre-seen information Semester 1 2010
Australian Beverages Limited — Pre-seen information
A. Introduction to Australian Beverages Limited — March 2010
Australian Beverages Limited (ABL) commenced soft drink manufacturing in 1937. During the 1970s and 1980s, the company expanded its beverage portfolio by entering into other non-alcoholic beverage categories, such as fruit and milk-based drinks. Entry into the snack food market was recently undertaken in response to declining consumption of carbonated soft drinks (CSDs), the company’s traditional area of business strength. This move also enabled ABL to leverage its strong distribution capabilities to supermarkets, convenience stores and hospitality channels by adding adding such complementary food products to non-alcoholic beverages. Nevertheless, CSDs still accounted for 90 per cent of company revenue in 2004. Tom Dwyer, the current managing director, has been with the company since 2005. He joined the company at a time when CSD growth was stagnating and shareholder confidence in the company was waning. This had resulted in the share price declining by 15 per cent in the two years prior to his appointment. In order to restore shareholder confidence, Dwyer established a strategic planning team within the company to assess the current product portfolio and identify organic and acquisition growth opportunities. From this review the importance of operational excellence was identified and strong investment was made in world class manufacturing facilities and systems. Process re-engineering was implemented to reduce costs of manufacture and time to market. Having finalised the integration of a snack food business acquisition just over 12 months ago, Dwyer is now aware that he needs to identify further growth options given predicted continuing decline in the CSD market. In January 2010 he asked the strategic planning team to undertake another detailed review of opportunities for