Coca-Cola returns to growth path in Q2

The country's largest beverages maker, Coca-Cola, has managed to grapple with demonetisation and rollout of goods and services tax (GST). Controlling over 40 per cent of India's branded beverages market, the firm saw its sales volume grow six per cent during the September quarter, James Quincey, chief executive officer of The Coca-Cola Company, said in an investor call on Wednesday late evening in the US.

While the global cola major faced difficulties in other larger markets like Brazil and Venezuela, its India business revived after quite a few quarters. "India returned to growth with volume up six per cent, driven by solid performance across the portfolio," he said. While the firm's India sales volume declined four per cent each during July-September 2016 and January-March 2017 quarters, respectively. During the crucial summer months, when cola firms usually rake in 40 per cent of their yearly sales, Coke's volumes dipped two per cent in the India and Southwest Asia regions, according to filings with Securities and Exchange Commission (SEC).

"Our business successfully moved past the recent difficulties related to demonetisation and implementation of a goods and services tax (GST) during the first half of the year (2017)," Quincey told investors.

Even as many other food and beverages (F&B) players operating in India cope with transition to GST, Coke's performance already shows success, experts say, owing to a distributor-centric model. Compared with other F&B marketers leaning on wholesale trade channel accounting for over 40 per cent of their sales, Coca-Cola's reliance seems much less. 

Also its new-found focus of reducing dependence on carbonated beverages and transforming the portfolio to become a 'total beverages company' by offering a wider range of choices may have helped. The aim is to cater to all eight drinking occasions in a day to consumers, which it expects may impart growth as cola sales suffered in recent years. During the past one year, Coke has rattled the market with back-to-back new launches in categories such as value-added water, coconut water, milk-based drinks and juices.

Re-iterating his strategy, Quincey on Wednesday further stressed on transforming the company. "One thing is constant across all our businesses: Consumer's desires are evolving - from low or no-sugar options to drinks with functional benefits or simply more variety. To thrive under this environment, we need to be more entrepreneurial and agile…build a more consumer-centric offering," he said.

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