‘Coke looking to grow revenues but on low calories’

Coca-Cola India is hoping to shape the choices of Indian consumers as it is expanding its presence by entering new categories with a slew of launches in the past two years which includes dairy and coconut water.

In line with its global commitments to speed up efforts to cut down sugar in its product portfolio, Venkatesh Kini, President, Coca-Cola India and South West Asia, told BusinessLine that the company aims to grow its revenues at a faster rate than the calories in its product portfolio. Excerpts:

How are you looking to solve the issue regarding the boycott international soft drink brands are facing in Tamil Nadu?

Given the size and complexity of the country, there is always going to be local challenges and issues. I don’t think we did a good job of explaining the positive role we play in the economy of Tamil Nadu to the retailers association that called for the boycott. That has been a lesson for us in Tamil Nadu. We have explained to the stakeholders about our initiatives which include sourcing mangoes and sugarcane from the farmers in the State and our harvesting programmes for water replenishment.

Our flagship may be a global brand, but 95 per cent of what we make in India is locally sourced. Once we got into that dialogue, there was realisation that we hadn’t done a good job of sharing these facts. Also that there was a strong emotional issue based on real challenges the State is facing and we got embroiled into it. This is the burden that famous brands face, when someone wants to draw attention to an issue and connects it to a well-known brand it gets attention.

We are unfortunately the lightning rods of most issues. Boycotting us will not solve the problems of the State. We recognise the emotion behind it. We are engaging and working with various stakeholders to see how we can be part of the solution, and in the process be welcomed back into the stores.

Coca-Cola has made global commitments to cut down on sugar levels. How are you scaling that up in India?

Our global commitment of moving towards “beverages for life” is recognition that there are diverse consumers in the world. We already have a wide portfolio of beverages that may not be available in every country and now we are focusing on making it available across the world. Eventually, our portfolio in India will reflect what it is like in many developed markets.

In India, in the last two years, we have entered the dairy business with Vio, the ready-to-drink iced tea category with Fuze tea, active hydration space with Aquarius, and now we have also entered the coconut water category with Zico. We already have a range of zero sugar products besides our sparkling, still and functional beverages that are available in different sizes including single serves. We will now focus on scaling up distribution of our wide product portfolio across the country. It’s difficult to give specific targets. If we can grow our revenues at a faster rate than we grow the calories in our products, I think that’s the best metric. One of our commitments is to shape choices and that means we will actively promote choices that are lower in sugar and calories.

What are your plans to scale up your latest packaged coconut water brand Zico?

Right now, we are importing the product. We have launched it in Gurugram and you will see it in Delhi-NCR. Once we understand the potential for this, we will start working on the supply chain. It takes a while to set up the local supply chain since we are not sure about the size of the potential. Eventually, we will scale it up to all the big cities.

Is the impact of demonetisation fading away now?

The short-term pain because of demonetisation seems to have eased. Though we don’t know if there will be any cascading effects but I think the worst is over. We believe consumers will increasingly use digital payments and platforms with the rapid adoption of smartphones and lower data costs. We are contributing in our way by training small retailers and kirana shop owners and have tied up with SBI to enable retailers and distributors to conduct business transactions digitally.

The rural demand had seen slowdown in the past two to three years. What are your expectations for this year?

In the past two-three years, rural demand suffered because of bad monsoons. Last year monsoons were good, but demonetisation was there. This year we expect rural demand to see a recovery, especially in summer as the effects of demonetisation have eased. So, we are cautiously optimistic.

Coca-Cola has made various investment commitments to make India the fifth largest market globally by 2020? Are you on track to achieve this?

India is already the sixth largest country globally for Coca-Cola. We hope we can achieve the target to become the fifth largest market earlier than 2020 (rank in terms of volumes). Our investments are on track and we have set up five new factories in the last three years and announced new projects in a number of States. In the last two years, we have expanded our portfolio rapidly. We are now in every product category in beverages sector that is of a significant size in India. Our key focus will be to create capabilities at the front end to make this product range available nationally.

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