Coke takes road to transformation, targets health-conscious consumers

The country’s largest beverage maker Coca-Cola India is slowly but steadily transforming itself, as the pressure to move away from fizzy drinks and target health-conscious consumers grows. In the past three years, the Indian unit has launched nearly two dozen products in categories such as juices, water, and milk-based beverages, taking its revenue contribution from non-fizzy drinks to 40 per cent from 25 per cent. 

Backed by recent bold bets in coffee (it acquired Costa Coffee last week globally and will rejuvenate the brand in India) as well as its interest in health drinks, including brands Complan and Horlicks that are up for sale, Coca-Cola India's plan, say executives, is to take its revenue contribution from non-fizzy drinks to 50 per cent in the next three to five years.

Coca-Cola's total India revenue, including turnover from company-owned and franchisee bottling operations, is Rs 160 billion, with 60 per cent coming from fizzy drinks. A Coca-Cola India executive said, “We have a good mix of sparking and still beverages. It is difficult to say when the share will become equal but what we can say is that both categories are growing at a healthy rate.”

T Krishnakumar, president of Coca-Cola’s India and Southwest Asia business, had told Business Standard in May that the company was expanding product coverage in non-fizzy drinks, targeting categories such as dairy. “We have not phased out Vio,” he said. "Rather, the next set of product launches will be under our dairy segment. Currently, three to four product formats are in the incubation phase. The new products will be placed under our existing dairy brand," he said.

While the firm saw its second straight quarter of double-digit volume growth in April-June, led by fizzy drinks such as Thums Up, Sprite, and Fanta, Coca-Cola is not taking its eye off categories such as juices and water that have also shown good sales traction in recent quarters, experts said.

In fact, the plan is to step up launches aggressively as the firm identifies health and wellness as a key product platform. "We launched Minute Maid Smoothie last week, which combines fruits, milk, and nutrients,” the executive said. “It is a continuation of our efforts to expand into health and wellness. In the last financial year, we entered segments such as enhanced hydration, nutritious dilutables, and beverage-plus drinks at affordable price points. We are innovating in the ready-to-drink flavoured dairy segment and will continue that initiative.”

Coca-Cola had also indicated last year that it would like to make Maaza, its popular mango juice drink, into a billion-dollar brand by 2023. It also said that it was investing Rs 57 billion in the Indian agricultural system along with its partners to achieve the objective.