The real challenge for Coke in the Indian market is how to grow per capita consumption, admits Coca-Cola India President and CEO Mr Atul Singh. The per capita consumption of Coke beverages in India is 11 as compared to a global average of 89, but the upside, as Mr Singh says, is that the opportunity here is immense. In an exclusive interview with Business Line, he, along with Mr Joseph Tripodi, Executive Vice-President and Chief Marketing and Commercial Officer, Coca-Cola, talked about the company's progress in the Indian market.
How does India contribute to Coke's global story?
We are in the top ten now. Our aspiration is to get to the top five as soon as we can and we are working towards that.
What are the challenges here?
The real challenge in India is how you grow per capita consumption of our beverages. It is low, but then again it is a function of the demographics – we have a billion people here. And we are quite happy with the progress. When you look at trends in urbanisation, the bigger opportunity is here. Both urban will grow, and rural will grow in the different categories we compete in. A McKinsey report says there will be 300-500 million new people added to the middle-class in India. All of that is great news for FMCG companies. And we compete in multiple categories. We want to drive each of the categories we compete in, and we believe there will be growth in each.
Any particular categories doing better for you?
All are growing. Sparkling is growing, juice is growing, ready-to-drink, and tea and coffee are growing. We have had 21 consecutive quarters of growth in India. Last quarter was 19 per cent. But we say, don't get hung up by “ idhar 19 and udhar 17” – look at the consistency instead.
So, how will you grow per capita consumption?
Joseph Tripodi: By focusing on transactions. One of the mistakes we made in the US was to be too focused on volumes. We probably should have been more focused on transactions. That's very similar in India.
Atul Singh: If you see, the 200 ml glass bottle in India is all about transactions. We have got what we call the OBPPC or Occasion Brand Pack Price Channels strategy. So, we have got cans; a 200 ml glass bottle at entry price point; a 300 ml glass bottle ideal for restaurants; we have in some markets, the express packs – 350 ml on-the-go convenience resealable packs; we have 600 ml bottles; and the 1.25-litre fridge pack, because we know that the 2-litre bottle does not fit into many fridges in Indian homes. As opposed to this, in the old days it was just 300 ml and a two-litre pack.
Joseph Tripodi: Transactions build habits, and that's the key. You can have good complexity and bad complexity. You can have good simplification and bad simplification. In the US, we had bad simplification. Here in India, Atul and his team - what they are building is good complexity on the package side. It's allowing a price point for everybody.
Coke has remained a beverage company while your rival Pepsico has diversified. Will Coke consider getting into snacks?
Joseph Tripodi: We are going to stay a beverage company. We can compete in up to 13 different non-alcoholic, ready-to-drink and non-ready-to-drink beverage products such as tea. Focus is important. And that is what Atul is bringing here in India. We are constantly innovating and learning, in what we do, but we are clear that we cannot do everything, and are going to be focused on our core - sparkling, juice, drinks and water.
Any innovative retail solutions coming out of India?
Atul Singh: For traditional trade, we have got a programme called Parivartan with Coca-Cola. We have already trained 85,000 mom-and-pop stores by taking a mobile school to the villages – a Tata Bus which can seat 25-35 people. We teach skills like how to merchandise, look after stock rotations, and so on.
In terms of modern trade, we are working with the Indian School of Business in a mini-retail MBA kind of programme where the first batch of 35 students are out there right now, getting global best practices about trading.
And in terms of digital, we are working with customer partners and supporting them in their growth plans.