{"id":2278,"date":"2013-12-14T07:15:00","date_gmt":"2013-12-14T07:15:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=2278"},"modified":"2022-09-07T07:17:17","modified_gmt":"2022-09-07T07:17:17","slug":"coke-20-ups-the-cola-game","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/coke-20-ups-the-cola-game\/","title":{"rendered":"Coke @ 20 ups the cola game"},"content":{"rendered":"\n

Vishnu Rageev R, Money Indices
\n New Delhi, December 14, 2013<\/i><\/p>\n

An \n empowered middle-class has been fuelling the growth of India all \n these years, prompting multinational companies like Coca-Cola \n India, fondly called Coke, to (re)strategise and relook at its \n markets for a better share from the country’s continually \n widening multi-billion dollar retail basket.
\n The company, which has seen six consecutive years of double-digit \n growth, will settle with an additional investment of $5 billion \n to deliver innovation, develop business relations and strategic \n partnerships, uplift consumer experience, ensure product affordability, \n and build countrywide brand loyalty in the coming years.<\/p>\n

Some interesting times are in store for Coca-Cola India, as the \n CEO of its historic rival PepsiCo, Indra Nooyi, recently announced \n an investment of $5.5 billion in the country by 2020. The proposed \n investments by these two cola giants, estimated at $10.5 billion, \n will restore foreign investor confidence at a time when India’s \n growth story has been hit by economic turbulences, pushing it \n to a decade low.<\/p>\n

“We are here to be successful,” said Ahmet C Bozer, \n Executive Vice-President, The Coca-Cola Company (TCCC), at an \n interactive session in Greater Noida, after the opening of Coca-Cola’s \n 57th bottling plant in India. “India would continue to flourish \n and our $5 billion investment plan is very well on track. We do \n not anticipate it to come down. Rather, it can be more. I see \n India emerging as one of the top five markets for TCCC by 2020.”<\/p>\n

The non-alcoholic ready-to-drink beverage industry, which witnesses \n one of the largest investments in the country, has contributed \n significantly to the growth of allied industries. This industry \n is witnessing robust growth, driven by a combination of factors \n such as increased investments and innovations. Macro-indicators \n and the demographic dividends too favour robust growth for the \n beverage industry in India.<\/p>\n

20 years of happiness<\/b><\/p>\n

In 1977, George Fernandes, the Industry Minister in the then \n Janata Party government of Prime Minister Morarji Desai, issued \n an exit order to Coca-Cola. Although reasons for the exit order \n are still unknown, it was widely rumoured that the exit was ordered \n because the company was reluctant to share its secret formula \n with the government. However, India was too big a market to be \n kept off its radar forever.<\/p>\n

“Our last two decades have been a journey of innovations, \n offering portfolio choices to consumers, contributing to the growth \n and development of the community and society in our own small \n way and playing a key role in bringing overall economic growth \n and development to India,” says Deepak Jolly, Vice-President, \n Public Affairs & Communications, Coca-Cola India & South \n West Asia. “Along the way, we have seen the acceptability \n of packaged beverages growing. Today, packaged beverages are a \n convenient and safe source of hydration, refreshment, and nutrition. \n Our lives are much easier with the pick and go options of packaged \n beverages, which have become a part and parcel of our everyday \n lives and count as good value-for-money options.”<\/p>\n

Coca-Cola India has specifically been adaptive to the Indian \n environment. The company learnt quickly from their initial mistakes \n and tweaked its business model. Instead of worrying about competition, \n the company focussed on the consumer, which was an apt strategy.<\/p>\n

“Over the last 20 years, Coca-Cola has made a genuine attempt \n to touch the lives of Indian consumers and be a part of their \n lives,” feels Jagdeep Kapoor, Chairman and Managing Director \n of Samsika Marketing Consultants Pvt Ltd. “Whether it is \n in terms of distribution spread or in terms of adapting to the \n Indian language in their advertising campaign, they have tried \n to be relevant to the Indian consumer through ‘Thanda Matlab \n Coca-Cola’ and the message of ‘Opening up Happiness’ \n and spreading indulgence through ‘Haan Mein Crazy Hoon’. \n Their focus on distribution, penetration and their aggressive \n ‘Prizing Sizing’ strategy has helped grow volumes and \n gain consumer acceptance.”<\/p>\n

Coca-Cola India currently provides direct and indirect employment \n to over 1,50,000 people. The company provides extensive support \n to community programmes across the country through a series of \n Corporate Social Responsibility (CSR) initiatives focussing on \n education, health, and water conservation. ‘Support My School’ \n campaign is the company’s flagship CSR programme which has \n revitalised close to 200 model schools in India.<\/p>\n

Quenching India’s thirst<\/b><\/p>\n

For the Atlanta-based TCCC, a country of 1.2 billion people remains \n one of the last big frontiers as Indians on average consume only \n 12 eight-ounce bottles of Coke a year when compared with 230 bottles \n in Brazil and 92 bottles globally. Through horizontal expansion, \n the company is looking to increase per-capita consumption in India.<\/p>\n

“The non-alcoholic ready-to-drink beverage segment has been \n growing at a compound annual growth rate (CAGR) of 13 per cent \n since 2009, and is one of the segments that have defied the economic \n slowdown,” adds Arvind Varma, Secretary General, The Indian \n Beverage Association (IBA). “We expect the country’s \n beverage industry to continue to grow in double digits in 2013, \n despite the recessionary trends being shown by most economies \n the world over, including the Indian economy.”<\/p>\n

“We are working on a strategy to generate sales of our soft \n drinks across all seasons rather than just the summer,” adds \n Deepak Jolly. “We are working to de-seasonalise the business \n and want to make it a 12-month business. That means not just year-round \n marketing, but efficient distribution systems, reaching remote \n untapped markets, affordable pricing, innovative cooling solutions, \n and trade activation. Our spending will be in keeping with our \n brand plans, and our communication strategy will also be aligned \n to this business reality.”<\/p>\n

“Yes, it is critical for Coca-Cola to tweak their existing \n business circus in India,” says Ramanujam Sridhar, Founder \n and CEO, Brand Comm. “India’s beverage market has evolved \n and is as promising as any foreign market. You might remember \n that earlier, beer was a beverage which was consumed only during \n summer. Today, there are customers for beer round the year. Coca-Cola \n also has to apply a similar strategy by creating occasions and \n moments in its customers’ mind so that they would come for \n it on a daily basis. Of course, it is a great brand.”<\/p>\n

The company has introduced many revolutionary strategies over \n the last 20 years. It even introduced a few innovations like solar \n cooler, Vitingo, Minute Maid Nimbu Fresh, PET bottles, fountains, \n dispensers, etc.<\/p>\n

Growing portfolio and volume<\/b><\/p>\n

On October 24, 1993, Coca-Cola was launched in Agra. Since then, \n Coca-Cola India has taken rapid strides in the packaged beverage \n market, bringing two of the country’s largest soft drinks \n brands – Thums Up and Sprite – into its portfolio. Coca-Cola \n India is now one of the fastest growing brands, registering an \n 18 per cent volume growth during Q3, 2013.<\/p>\n

“We have registered volume growth in India for the past \n 29 consecutive quarters, 19 of which have seen double-digit growth,” \n informs Deepak Jolly. “Over the last six years, Coca-Cola \n has delivered double-digit volume growth in India. Two of the \n company’s core sparkling brands – Sprite and Thums Up \n – are the country’s top-selling soft drink brands. Trademark \n Coca-Cola is one of our fastest growing sparkling brands and Maaza \n is India’s largest-selling juice drink. Kinley is the country’s \n largest retail packaged drinking water brand.”<\/p>\n

Offering an unmatched portfolio of beverages, Coca-Cola India \n manufactures and markets brands like Coca-Cola, Diet Coke, Thums \n Up, Fanta, Limca, Sprite, Maaza, Minute Maid Pulpy Orange, Minute \n Maid Nimbu Fresh, Minute Maid Mixed Fruit, Minute Maid Apple, \n Minute Maid Guava, Minute Maid 100% Juice (Minute Maid Apple, \n Minute Maid Orange, Minute Maid Grape), Georgia, Georgia Gold, \n Kinley, Kinley Club Soda, and burn through a network of over two \n million outlets.<\/p>\n

Seemingly, India remains among the top growth markets for the \n American multinational. Other major growth markets are Thailand \n with 18 per cent growth, Russia (8 per cent), Mexico (3 per cent), \n and Brazil (3 per cent).<\/p>\n

Cola business of Coca-Cola<\/b><\/p>\n

At the core of Coca-Cola’s business in India, as in the \n rest of the world, is its production and distribution network, \n called “Coca-Cola system”.<\/p>\n

In India, the Coca-Cola system comprises a wholly-owned subsidiary \n of The Coca-Cola Company, namely Coca-Cola India Pvt Ltd, which \n manufactures and sells concentrate and beverage bases to authorised \n bottlers who use these to produce “our portfolio of beverages”, \n says Deepak Jolly. These authorised bottlers independently develop \n local markets and distribute beverages to grocers, small retailers, \n supermarkets, restaurants, and numerous other businesses. “In \n turn, these customers make our beverages available to consumers \n across India.”<\/p>\n

The Coca-Cola system in India now operates 58 manufacturing plants, \n catalysing economic growth and providing employment, explains \n Deepak Jolly. “Coca-Cola, along with its bottling partners, \n has robust plans to capture growth in India with investments in \n innovation, expansion of distribution network, cold drink equipment \n placement, and augmentation of manufacturing capacity.”<\/p>\n

The Coca-Cola system has already invested $2 billion in India \n between 1993 and 2011, refreshing and hydrating consumers more \n than 500 times per second. The company is also one of the largest \n buyers of sugar, mango pulp, and coffee beans in India.<\/p>\n

Cola war<\/b><\/p>\n

Coca-Cola and PepsiCo together dominate the market for carbonated \n soft drinks in India, where soda sales overall are estimated to \n total $1.05 billion. Coca-Cola enjoyed leadership position in \n carbonates in 2012, accounting for 60 per cent of the total value \n of sales, points out a study by Euromonitor. “Stronger distribution \n in the existing categories and entry in new markets in rural India \n helped the company retain its strong position,” says the \n study.<\/p>\n

Coca-Cola and Pepsi are healthy and historic rivals and they \n would continue to be so, says Varma of IBA. “It is an ongoing \n market race all over the world wherever both these cola giants \n are present. India is not an exception. It is really difficult \n to say who is better than the other. India has enough room for \n both the companies to grow and multiply. The market would further \n open as they bring in more investments.”<\/p>\n

Elections or no elections, PepsiCo’s India-born Nooyi said \n the firm would invest $5.5 billion by 2020 to more than double \n its capacity. “We are not guided by elections. We are guided \n by the potential of India. We are not waiting for any election \n results. We are investing in India for its economic story,” \n Nooyi had told recently after her meeting with Finance Minister \n P Chidambaram.<\/p>\n

Pepsi had a head-start in India over Coca-Cola in its current \n avatar not only in terms of timing, but also in terms of distribution, \n reach, and product diversification (supported by Pepsi’s \n global M&A activity during the 1990s and 2000s), opines Devangshu \n Dutta, Chief Executive, Third Eyesight. “Pepsi has a larger \n proportion of non-carbonated beverages and a packaged snack portfolio \n that Coca-Cola lacks, which potentially provides a larger share \n of wallet to Pepsi and provides avenues for consumers who may \n be looking at relatively ‘wholesome’ options.”<\/b><\/p>\n

Pepsi has 42 plants in India, including franchises. “India \n is a country with huge potential and it remains an attractive, \n high-priority market for Pepsi. We’ve built a highly successful \n business in India over the course of many years and we believe \n we’ve only scratched the surface. This investment is PepsiCo’s \n vote of confidence in India’s future,” Nooyi had said.<\/p>\n

Coca-Cola’s growth will primarily be driven by rural areas, \n as urban areas are facing a degree of saturation, as well as shifting \n to healthier options, such as fruit\/vegetable juice and bottled \n water. The company has equipped retail outlets in remote rural \n areas with solar coolers. Smaller pack sizes are also driving \n sales in rural areas whereas PET bottles are pushing sales in \n urban areas. However, the company does not have any immediate \n plans to get into ready-to-eat market.<\/p>\n

Both – Coca-Cola and Pepsi – announcements (on investment) \n came on the same day and convey the underlying thrust of competition \n both the brands would engage in as they raise piles of money to \n stay ahead, avers Sridhar of Brand Comm. “Both the brands \n have good marketers and they must work for developing better connect \n and loyalty among customers. The pace at which they can travel \n into more rural areas with intriguing campaigns will ultimately \n decide the success rates.”<\/p>\n

India is the largest market for Pepsi. It will continue to expand \n the range of foods and beverages in its portfolio. In India, it \n has eight brands that generate Rs. 1,000 crore or more in annual \n retail sales — Pepsi, Lay’s, Kurkure, 7UP, Slice, Mirinda, \n Mountain Dew, and Aquafina.<\/p>\n

[Article continued below…]<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Vishnu Rageev R, Money Indices New Delhi, December 14, 2013 An empowered middle-class has been fuelling the growth of India all these years, prompting multinational companies like Coca-Cola India, fondly called Coke, to (re)strategise and relook at its markets for a better share from the country’s continually widening multi-billion dollar retail basket. 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