Chilled out in the tropics!

Without diversifi cation, Coca Cola’s Indian ambitions remain hollow
Coca Cola India has always been inundated with problems. After its rather unceremonious exit in 1977, Coca Cola returned to India in 1993, but is still reeling. Coca Cola recently announced its results for quarter ending June 2006, which showed a steep decline of 12% in Coca Cola’s unit case volumes in India, as against a steady rise of 4% worldwide. Only saving grace being – Indian operations performed better than those of the Philippines (over 17% decline in sales).

Coca Cola’s problems in India have continued unabated, be it the pesticides chronicle in 2003, or the Plachimada controversy. And the latest results have clearly put Coca Cola on the back foot in India. Meanwhile, its long time nemesis – Pepsi India is witnessing a smooth ride. Why? The answer lies in diversification. States Nirjhar Handa, FMCG Analyst, Pioneer Intermediaries, “With increasing health consciousness, a larger number of Indian consumers are preferring fruit juices over aerated soft drinks.” Unlike Coca Cola, Pepsi has successfully diversified into fruit juices, agri-retailing, et al.

The juice segment in India is growing over 20% against 3-4% growth in carbonated segment. Coca Cola plans to enter with its fruits drink, Minute Maid, which will be pitted against Pepsi’s Tropicana & Dabur’s Real (which together control over 70% of the market). Atul Singh, CEO, Coca Cola India confirms that the company is looking to add “juices and health based products” to its portfolio. But will this be a case of too little, too late? Handa cautions that, “The longer they (Coca Cola) take to enter this (juices) segment, the more they’ll have to spend on brand building.” Further delays will only serve to enhance the prospects of another unceremonious exit for Coca Cola from the Indian peninsula.

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Source :- IIPM Editorial, 2006, Editor - Prof. Arindam Chaudhuri

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