Skip to main content

Coca Cola's India plans

CoCa Cola has long term plans for India. Any company before entering global markets takes into consideration 3 major entry decisions -
  1. Which overseas markets to enter
  2. Timing of entry
  3. Scale of Entry and Strategic Commitments

The decision on which markets to enter is based on assessment of a location's long-run profit potential, which in turn is a function of the size of the market, purchasing power of consumers, the likely future purchasing power of consumers; and, the need to balance benefits, costs, and risks associated with doing business in a country, which again, is a function of economic development and political stability in market places around the globe.

On both these factors, India is poses a huge potential for Coca Cola and its beverage products. But there are roadblocks too, while operating in India. Indians drink less soda per capita than people in just about any other emerging market. In spite of this Coca Cola is willing to look at the long term and so is pushing in greater investments. The company has already invested over $1 billion (Rs 4,100 crore) in India and is aware that global volumes growth would be tough if it doesn’t make the right moves in India. It plans to invest $250 million (Rs 1,025 crore) over the next three years in coolers and plants, while Coke’s bottlers are expected to chip in another $100 million to ramp up infrastructure and this $250 million is just the start.

Today, India is not one of Coke’s current Top 10 markets. Going forward Coke wants this to change. It wants India to become the No. 3 market in the long-term. Coke's global operations are its growth locomotive. More than 80 per cent of its volume and 70 per cent of its profits come from outside North America.
Coca Cola intends to play an aggressive role in every category in India. Whether it is the energy or the health drink segment, it plans to have a strong presence in every category. In keeping with this, Coca Cola will launch new products in India like no-calorie Coke Zero, which incidentally, is very popular in the US. Then there is a plan to launch Enviga, which is a calorie-burning green tea drink that contains antioxidants, around New Year. There are similar plans for Minute Maid Heart Wise, a cholesterol-burner. Coca Cola has seen a shift in consumers’ attitude towards diet and health with more and more people seeking product choices that support active lifestyles. This past quarter, Coca Cola's sparkling beverages grew 5 per cent and its still beverages grew 9 per cent around the world. This Coca Cola believes is only going to continue as more and more conversion takes place.
In the developed world today — in places like Europe and North America — 70 per cent of all beverage consumption is ready-to-drink. In the emerging economies, only 30 per cent of consumption is ready-to-drink. There is a lot of room to expand all categories. Coca Cola is No. 1 globally in sparkling beverages, teas, coffees and juices. It operates in one of the fastest-growing industries. By the end of the decade, this market is expected to grow to almost $650 billion (Rs 26,65,000 crore) globally. That’s a 40-billion unit case opportunity out there internationally — almost twice the size of Coca Cola's existing business.

( from BW’s Uttara Choudhury's interview with Coca-Cola’s president and COO, Muhtar Kent )
Pic :


Popular posts from this blog

Situational Involvement of Consumers

There are two types of involvement that consumers have with products and services, Situational and Enduring. Situational involvement as the term suggests, occurs only in specificsituations whereas Enduring involvement is continuous and is more permanent in nature.

Decisions to buy umbrellas in India are driven by the onset of Indian monsoon. Monsoon rains arrived in India over the South Andaman Sea on May 10 and over the Kerala coast on May 28, three days ahead of schedule. But then, after a few days of rain, South India is witnessing a spate of dry weather. Temperatures are soaring in the north of India. The Umbrella companies in the state of Kerala are wishing for the skies to open up. So is the farming community and manufacturers of rural consumer products whose product sales depend totally on the farming community. The Met. department has deemed this dry spell as 'not unusual'.

India's monsoon rains have been static over the southern coast since last Tuesday because of a…

Prior Hypothesis Bias

Prior Hypothesis bias refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions on the basis of those beliefs, even when presented with the evidence that their beliefs are wrong. Moreover, they tend to use and seek information that is consistent with their prior beliefs, while ignoring information that contradicts these beliefs.

From a strategic perspective, a CEO who has a strong prior belief that a certain strategy makes sense might continue to pursue that strategy, despite evidence that it is inappropriate or failing.

Ref : Strategic Management : An Integrated Approach, 6e, Charles W L Hill, Gareth R Jones

Consumer Spending

Carpe Diem Blog: From Visual Economics, a graphical representation appears above (click to enlarge) of Consumer Expenditures in 2007, using data from the Bureau of Labor Statistics. Note that total spending on food ($6,133), clothing ($1,881) and housing ($16,920) represented 50% of consumer expenditures and 30% of income before taxes in 2007. In 1997 by comparison, 51.1% of consumer expenditures were spent on food, clothing and housing, and 44.6% of income before taxes was spent on food, clothing and housing (data here).