Focus on returnable glass bottles and smaller PET packs is paying off in tackling inflationary pressures : Coca-Cola India

Meenakshi Verma Ambwani | Updated on: May 02, 2022
Sanket Ray, President,India and South West Asia, Coca-Cola

Sanket Ray, President,India and South West Asia, Coca-Cola

Coca-Cola India said it is witnessing strong sales with demand being higher than expectations due to soaring temperatures. The beverage major has taken a slew of measures to tackle inflationary pressures, including ramping up focus on returnable glass bottles and smaller PET packs. The company said it saw volume and revenue growth in the mid-teens in the first quarter. Sanket Ray, President, India and South West Asia, Coca-Cola told BusinessLine, that the company is seeing robust demand pan-India across both rural and urban markets and that the company is proactively tackling inflationary pressures while continuing to protect entry level price points. Excerpts:

How are you tackling inflationary pressures ?

From the planning stage in 2021 itself, we focussed on taking certain steps which have helped us to work through the current high inflation environment. We restarted focus on the Returnable Glass Bottles (RGB) business initially in a select States and reduced their price from ₹12 to ₹10 and the strategy has done well, so we are further expanding RGBs to other States. We also started putting a stronger focus on smaller PET packs. So our focus on small PET packs, mini-cans, and multi-packs is paying off. Through partnerships such as with Swiggy during IPL, we are also focusing on building specific occasions around food. In addition, we have been focussing on multiple enterprise-wide initiatives to reduce our costs. We have also taken minor price increases of 3-4 per cent on larger packs and executed pack price mix strategies to cover for the inflation pressures. So we are proactively managing inflationary pressures and will continue to protect entry prices of ₹10 and ₹20. We are committed to be one of the top performing categories in the consumer segment this year, driven both by transactions and pricing.

How is the April quarter panning out ?

The demand is more than what we had anticipated during the planning stage due to higher temperatures. What we are seeing is that the sub-₹20 price point is becoming very important due to inflationary pressures, even in juices, where we now have significant offerings at ₹10 and ₹20 price-points. In addition, there is a shift in consumer behaviour as they are increasingly buying multi-packs of our smaller PET packs for both for on-the-go and at-home consumption. 

Are there concerns around rural demand trends ?

While inflation is a challenge, we are seeing good demand in the rural segment due to various factors. Post-Covid , the mobility trends have seen significant improvement, and events such as weddings are back in full swing. Higher disposable incomes are also expected to come to the rural markets with the growing demand for wheat and rice exports in light of the Ukraine crisis. So, we are betting big on the rural markets in the majority of states. We have been pushing our RGB packs, especially in rural and semi-urban regions, with a focus on states such as Odisha, AP, Telangana and Gujarat.

Have you also done tweaks in innovation strategies ? Will there also be focus on premium offerings ?

When it comes to innovations, we have been focussing on qualitative innovations backed by consumer insights rather than quantitative innovations. New launches have been made in the zero and low-calorie segments and regional flavours in recent times. Our launches of Aam Panna, Rimzim, and an apple juice-based sparkling drink are seeing strong traction .We are targeting 10-15 per cent of business growth to come from innovations. While a lot of work is being done in the core categories, in terms of our premiumisation strategy, we are working on a range of products to be rolled out later this year.

Are there concerns around the ongoing power crisis in the country in terms of operations of production plants ?

We have not seen an impact on industry due to power-related issues. In fact, we are making investments to transition to solar power. By the end of next year, more than half of our requirements will come from solar power. Power-shortages do impact our coolers for storing drinks at stores, so work is underway to develop more energy-efficient coolers.

What are your plans for capacity expansion ?

We, along with our bottling partners, have been fast-tracking capex in recent times. Since June 2021, investments of $250 million have been made in 13 new lines in INSWA (India and South West Asia). Broadly, we expect to see $400-500 million getting invested in terms of annual investments happening every year led by bottling partners.

Published on May 02, 2022
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