A Times of India article discusses how Coca-Cola is investing $2 billion in India over the next five years, and how tailoring products for the bottom of the pyramid will help the company achieve its Vision 2020 – to double its revenue to $200 billion by 2020. Recently, Coca-Cola established the Emerging Markets & Franchise Leadership to promote growth in rural India. As part of this initiative, the company has introduced new products at lower price points.
Last year, a bunch of senior managers from Coca-Cola India undertook a unique team building exercise – they walked on fire and fell backwards on the assurance that a team member would be there to support them just in time. That team included Coca-Cola India’s boss Atul Singh as well. At the heart of the programme was what Singh sincerely believed in-good teams can achieve the unimaginable. Singh, who completed six years in September this year as president & CEO, Coca-Cola India and South West Asia, takes personal interest in such employee behaviour programmes, aimed at inculcating a sense of enterprise and risk taking among the leadership team.
These are the very skills which have instilled a sense of purpose ever since he took over at the helm after a brief period of what a lot of people call rather roller-coaster ride for the company. These could be the same skills which could perhaps push the Atlanta-based soft drinks giant to achieve its vision 2020.
A few years ago, Coca-Cola had apprised investors of its plans to double revenues to $200 billion by 2020. It said about 60% of the incremental sales volume growth will come from emerging markets like India and China. “We are on course as far as achieving our 2020 vision goes. However, we have another nine years to go and hence we need to collectively ensure that we are doing the right things every day and every time,” Singh, in Mumbai on one his market visits, said taking a sip of Diet Coke at The Belvedere, The Oberoi.
That India has been at the centre of the Atlanta-based cola major’s strategy is well-established . The India operations proved its significance by delivering a growth for the last 21 quarters in a row. Of these, 15 quarters clocked double-digit growth. What confirmed the India-focused strategy was the stamp of approval which came in the form of an announcement that the parent would invest $2 billion in India over the next five years, starting 2012. “This will help us realize the vision for our business in India,” he said.
The last six years have been exciting and enriching for Singh, to say the least. Having spent a decade with Colgate-Palmolive , largely in Africa and Europe, and then a stint with consulting major Price Waterhouse in New York, he has been at the helm of businesses spanning four different continents.
The company, having turned around its business in India, now ranks among the top ten markets for the parent. “But there is a long way to go,” said Singh, who believes the firm has just scratched the surface in Asia’s third largest economy.
And he is not off the mark. In a country of water drinkers, and preferences tilted towards hot beverages like tea and coffee , there is enough work to be done on converting consumers to drink a cola, like in the West. The low per capita consumption therefore holds a lot of promise for Coca-Cola India.
The company believes, as the economy evolves and a number of channels like restaurants, airports, bars and cinema halls, emerge, it will be a turning point for all cold beverage makers. “If a million people buy one litre of sparkling water, that would translate into a huge sales number,” said Singh, making his point clear. Coming from an accounting background, number crunching comes naturally to Singh. But so does marketing.
As a business, Thums Up and Sprite are the top selling soft drinks in India. Having delivered a good growth in the previous quarter-with a volume growth at 19% (sparkling growth at 19% and stills at 17%)-Coca-Cola India wants to continue its focus on both sparkling and stills. At the same time, it wants to be a total beverage company that offers choice to consumers. Singh is keen on some very high potential brands which are a unique mix of “Made in India” and “Made for India” products for the country. Indian innovations already in the market include Nimbu Fresh and Maaza Milky Delight. A big priority for Coca-Cola India clearly is horizontal expansion of retail outlets even though its products are present in more than 1.5 million outlets currently. This horizontal expansion would also enable the company to capitalize on the huge rural opportunity. But what’s holding back Coca-Cola India is the cost involved in a two-way travel of delivering glass bottles to the hinterland and collecting them back. Electricity is another one.
This is where the company is looking to push tailor-made bottom-of-the-pyramid products . In fact, it recently created a new vertical called Emerging Markets & Franchise Leadership fronted by Sanjeev Gupta to drive growth in rural markets , still a largely untapped market. Two products from the Coke stable which have been launched catering to this segment are Vitingo, a beverage powder enriched with vitamins , and Fanta Fun taste powder at the Rs 5 price point which was piloted in April this year. Its archrival PepsiCo, too, has been accelerating its focus in this segment seeing a huge potential there.
Coca-Cola is also hoping to drive the impulse segment growth by bringing more consumers into its fold. Consider this. Twenty years ago, there were very few water brands. Today , there are more than 1,000 bottled water brands. The energy drinks segment got created only recently. When it first launched the energy drink Shock, it failed because it was early for its time. Its re-entry with Burn seems to have clicked with the pub-hopping youth. Although Coca-Cola India has over 3,000 products to pick from across the world, it is in no hurry to bring them to India, given the small volumes that they would generate. Instead , it wants to focus on the products in hand.
With 14 bottlers now in India , Coca-Cola seems to have built stronger ties. “If we continue to do the right things each day and at all times, it would not surprise me if India becomes one of the top five markets for the company globally , by the end of this decade,” said Singh. The man certainly has the conviction to do it. The leadership and team building programme where Singh walked on fire should now come in handy.