Coca-Cola on Monday said the company and its bottling partners are investing significantly in India, which has reached an inflection point backed by infrastructure expansion, rural electrification and digitisation. The beverage major, which divested its company-owned bottling operations in North India in 2019, said it will look at adopting a similar strategy in other regions in the long term.
Speaking at a select media roundtable, John Murphy, President and CFO, The Coca-Cola Company, said “a lot of investments” are underway by the company and its bottling partners in the country. “We are very confident that the growth equation for India will be in the top quartile of the world. We, along with our partners believe in the opportunity ahead and are willing and capable of investing whatever it takes to stay relevant and have our fair share of the pie,” he added.
Moving up the ranks
India is the fifth largest market globally for the beverage major and Murphy believes it will continue to move up the global rankings. He added that India is going through an inflection point driven by several factors. “Infrastructure development is taking place in a systemic way across India. The electrification landscape has transformed, not just in larger cities and towns but also in rural parts. India is perhaps leading the world in digitisation. There has been significant reduction in poverty over the last 15-20 years and there has been an emergence of the middle class. The FDI numbers have been impressive. So, there is a flywheel that has been unleashed and it promises tremendous opportunity for everybody,” he added.
In 2019, Coca-Cola decided to divest bottling operations of its bottling arm, Hindustan Coca-Cola Beverages (HCCB), in North India. Responding to a query on future divestment plans, Murphy said, “Our aim is to focus on things that we are good at, which is building brands and being a good franchise partner to our bottlers around the world. So over the years, we will divest in other regions in India and we will do it in a thoughtful and a very deliberate manner.” HCCB currently operates about 25 plants in the southern, western and eastern regions in India.
Strong opportunity
Murphy’s visit to India also comes at a time when the competition is heating up in the beverage sector and Reliance’s foray in the packaged beverage space has created a lot of buzz. But he believes that competition is “actually a good thing” for the beverage industry and reflects the strong opportunity available in the market. “But it does not therefore, translate to a price-war. The tools the different players use will vary overtime. And we feel very good about the tools that we have in our armoury to compete. We have experience not only as a company but as a system in different markets and we will lean heavily on our playbook to ‘bring our A-game to the market,” Murphy stated.
In February, the beverage major had said 2022 was its strongest year in India. Coca-Cola India has also seen two of its brands — Thums Up and Sprite — becoming billion dollar brands over the last two years.
The author was in Lucknow at the invitation of Coca-Cola India