Coke to widen offerings in bid to make India No3 market

01 Sep 2017


The Coca-Cola Company plans to introduce more fruit-based and other healthy drinks in India to cut its reliance on its flagship aerated beverage, its visiting chief James Quincey said in Mumbai on Thursday.

''The company needs to be bigger than brand Coca-Cola,'' said Quincey, the 52-year-old newly appointed president and chief executive officer of the company.

India has the potential to become the third-largest market for Coca-Cola Co, said Quincey, who is on his first visit to India after taking over the top job at the world's largest beverage maker from Muhtar Kent in May.

Quincey's itinerary includes meeting representatives of the Maharashtra government following the announcement of a nearly Rs11,000-crore investment along with partners in the country in June, launching an orange flavour in the company's Minute Maid portfolio, and visiting the Gurgaon office of Coca-Cola India near Delhi today to address employees and review operations.

British-born Quincey, who succeeded Muhtar Kent as CEO in May, said while Coke will always be the heart and soul, the company needs to be much bigger, which means participating in many more categories that the consumers want to drink.

The 130-year-old company is trying to speed up the development of healthier alternatives as consumers shift from fizzy drinks to low- and no-sugar options and drinks.

The share of sparkling or aerated beverages in Coca-Cola's global sales has narrowed to about 70 per cent from 90 per cent a decade ago as it broadened its portfolio with healthier alternatives.

In markets such as Japan, the sparkling business is a minority segment and a substantial chunk of sales comes from functional beverages including tea, coffee and water.

Coca-Cola's attempts in this direction India have paid off - in mango drinks, it controls half the market with sales of over Rs5,000 crore from Maaza. More recently, the maker of Thums Up and Sprite entered the dairy and functional beverages segment.

''The most immediate challenge for KK (T Krishnakumar, president, Coca-Cola India and Southwest Asia) is let's become No5 in the foreseeable future. In the end, my vision for India is that it will be one of the top three markets in the Coke system,'' said Quincey.

In 2012, Coca-Cola had announced plans to invest $5 billion in India by 2020. ''These investments are on track,'' said Quincey, adding that the company will continue to invest in the country.

India became the sixth-largest market by volume for the maker of Coca-Cola and Sprite in 2015, overtaking Germany, according to a company spokesperson. The company does not disclose contribution to revenue by region.

The US, Mexico, China, Brazil and Japan are the top five markets for the company in terms of volume, contributing 50 per cent of worldwide unit case volume, according to the company's annual report for 2016. The US contributed 19 per cent of overall volume while the remaining four regions contributed 31 per cent, said the report.

Quincey is optimistic about India's potential even as the company had a rough few quarters at the end of last year and the beginning of this year. The implementation of the goods and services tax (GST) and demonetization hit sales in the country in the first half of the calendar year, according to a statement on its website. In 2016, India operations registered a mere 4 per cent volume growth, according to its annual report.

Quincey's optimism is based on the fact that the company's India business has already started to grow after demonetization. ''GST, demonetization are bold decisions. They are good news for the businesses that operate in India,'' he said, adding that his company will innovate to adapt to the rules.

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