Coke adapts in India

09 August 2011

NEW DELHI: Coca-Cola is adapting its strategy in India, targeting channels from cinemas and shopping malls to rural retailers as it seeks to progress in the rapidly-expanding economy.

The firm has enjoyed 20 successive quarters of growth in India, a trend remaining constant despite the implementation of price increases in the last three months and unfavourable weather conditions.

Its long-term aim is to ensure each quarter contributes around 25% of sales, difficult to achieve in seasonal markets like India, where periods of heavy rain mix with spells of sustained sunshine.

Atul Singh, Coca-Cola's president, India and South West Asia, told the Business Standard: "The way to do it is to drive in-home and in-premise consumption because that doesn't get impacted by the season."

"Today we are focusing on various channels like movie-halls, malls, eat and drink channels to boost in home or in premise consumption which doesn't get impacted by the weather be it rains, hot or cold."

The company estimates approximately 40% of soft drink consumption now takes place in Indian homes, measured against just 10% some 15 years ago, a number it is hoping to push towards 90%.

One core audience is the 700m people living in rural India, with powdered drinks such as Fanta Fun Taste and packaged water among the main potential sources of growth here, especially as they are sold at a relatively low cost.

"The opportunity and the challenge is how we get that great taste in beverages to people who can afford to spend three-to-five rupees on it," Singh said.

Heightening availability is a vital goal to gain ground in the countryside, as Coca-Cola currently has a presence in between 1.3m and 1.5m of India's estimated 5m to 7m retail outlets, but is considerably stronger across urban centres.

"We are present in rural areas of Punjab and Andhra Pradesh but we have not penetrated in deep rural pockets where there is a vast market, where other FMCG companies have penetrated," said Singh.

A particular obstacle lies in serving chilled drinks in regions possessing an inconsistent electricity supply, and Coca-Cola provides tools from solar-powered coolers to ice boxes to distributors, alongside using sachets of powder which can be mixed with water.

Coca-Cola invests roughly $100m in India per year, dividing its expenditure between everything from trucks to brand extensions, and has also recently created the new School of Business Retail Academy in the country.

Data sourced from Business Standard; additional content by Warc staff