One could be forgiven for thinking there was something sinister going on between Woolworths and Coke's Australian distributor, Coca-Cola Amatil.

The supermarket giant will now cull three out of the five of Coca-Cola Amatil's Mount Franklin-branded mineral water products, only a few weeks after vetoing its newest cola, Coca-Cola No Sugar, from its shelves.

Woolworths has a simpler explanation - that the Mount Franklin product wasn't popular enough with customers, who clearly couldn't see the sense in paying a large premium for branded water.

But it does demonstrate the very clear power shift away from even large grocery/brand manufacturers towards the dominant supermarket players in Australia.

Coke simply doesn't have the clout it had in the past, which is a bad omen for a company that builds its business model on large sales volumes and premium prices.

Investors who sold down Coca-Cola Amatil's share price by 3 per cent in early Tuesday trading would have to be wondering if other grocers may follow the lead set by Woolworths.

And even if the shelf space remains at other supermarkets, there could be more pressure from Mount Franklin stockists for better prices.

Coles isn't giving anything away about its plans, saying it doesn't comment on negotiations with suppliers.

However, Coles chief executive John Durkan has recently commented extensively on the supermarket's push to reduce the number of individual products (known as SKUs) on its shelves.

"Our customer-led range simplification has led to a 5 per cent reduction in the average SKUs, the average products per store across the network, which reduces complexity for our merchandising team, our distribution centres, our stores, and most importantly, our customers," he noted in June.

According to reports, the shelf space freed up at Woolies will be devoted to its far cheaper home-brand water.

Thus while Coke may be famous worldwide for its cola recipe, its Australian operation seems to have lost the recipe for growing profits, thanks in part to this body blow from Woolworths and another major customer, Domino's Pizza, which has dumped Coke from its menus.

Coke simply doesn't have the clout it had in the past, which is a bad omen for a company that builds its business model on large sales volumes and premium prices.

It was only a few months back that Coca-Cola Amatil had to admit its net profit would fall in the first six months of 2017, which clearly threatens its previous near-term ambition to grow earnings per share by about 5 per cent a year.

This announcement was made before Woolworths or Domino's became an issue.

Since 2014, Coca-Cola Amatil's management has been re-engineering the business in an effort to streamline processes and take out hundreds of millions of dollars in costs. And this plan has been largely successful.

This corporate tidy-up has been undertaken against the backdrop of a larger structural shift towards lower calorie and healthier products in response to the public's focus on health.

And this is precisely why a dent in sales of water products and the launch of the new sugar-free cola is significant.

Mineral water is increasingly becoming the new non-alcoholic beverage of choice. For example, Woolworths says the whole water category is up 20 per cent on last year.

It says more and more customers are moving to a variety of water options and that it stocks about 20 different single-serve water products.

In a June note to clients, Citi analysts said volume and price was still a challenge for Coca-Cola Amatil.

"We forecast overall Amatil volumes to decline 3.1 per cent in financial year 2017 and 2.6 per cent in FY18. We expect the loss of shelf share to competitors in water and other still beverages will continue, along with a hit across the industry from the container deposit scheme in NSW and Queensland over the next 18 months.

"We also expect average price per case to fall 1.5 per cent in FY17e and 0.6 per cent in FY18e."

And just how much bounce Coke will get from introducing its newest no-sugar cola depends on how much this will cannibalise existing products like Diet Coke and Coke Zero. Already the low/no-sugar coke products account for about one-third of its cola volumes.

In this environment, it is easy to see that Coca-Cola Amatil's now-medium term target of single digit earnings per share growth might prove a particular challenge.