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| Edited By: Ashish K Tiwari |Source: DNA |Updated: Sep 04, 2017, 07:15 AM IST
The Coca-Cola Company's journey has primarily revolved around being a one-brand entity for most of its early life. But a lot has changed in the past decade. About ten years ago, the company had just five brands that were over a billion dollar globally; now that number is over 20. Sparkling portfolio, which comprised 90% of Coca-Cola's revenues, contributes just 70% to the topline now. The company hopes that in another 10-15 years, both the categories - sparkling and non-sparkling – will have an equal share in revenues. And while the beverage giant is not present in the food/snacks segment, its management doesn't completely rule out that possibility. Coca-Cola president and chief executive officer James Quincey, during his recent visit to India, spoke about his vision for the company, business plans and more. Ashish K Tiwari reports.
As a consumer company, we would like to be guided by what the consumer wants and how that creates value for them. What that means is, in the end, the company needs to become bigger than the world's best brand i.e. Coca-Cola. It's both a great strength to have the same name of the company and the brand, but it also somehow has limited us. The first thing we want to emphasise on is that while the brand Coca-Cola will continue to be the heart and the soul, the company needs to be much bigger. This means participating in many more categories that the consumers now want to involve and drink. So that's part of what we are really making a strong emphasis on.
The second thing is that the world is getting much bigger and there is no way to run everything from any one place in the world. So we see the operation getting both global and local. Yes, we have lots of local brands and we have lots of global brands. Every community needs to be served in the way that works for that community. So we're more clearly empowering our local managers like KK (T Krishnakumar, president - India and South-West Asia, The Coca-Cola Company) to lead the businesses. I am here to kind of emphasise that to our employees and bottlers while also supporting and enabling the local management to make this a great business in India.
Sometimes we have had great years and sometimes we've not. No business has grown in a perfectly straight line. So yeah, we have had a rough few months during the end of last year/beginning of this year. But things have started to turn around and come back. I don't think our expectation is for things to be a straight line. What we are looking for is that we're building the fundamentals of the much bigger businesses. Give the people what they want. Ultimately, it helps our partners make more money. In the end, if these things are done right, business will grow even if it is not a perfect straight line. So we are still very positive.
Yes, there are some issues in some of the provinces but overall, I think the brands are doing well. Our focus is on building each individual brand on its own. We have a range of sparkling brands and a complete range of other beverage categories. We will invest in more categories. We will continue to experiment. The sparkling beverages continue to grow in revenue terms in India and globally. So it's a category that's still vibrant. Of course, it's competitive and we need to continue to do the right things to move it forward from a marketing and promotion point of view. What we are focused on is not the 'or' but the 'and'. How do we invest and build the sparkling brands and do the other categories, invest in those brands, manufacturing and distribution systems behind it?
Over the last few decades, we have been investing in India. We've created lots of jobs and business, and it's become the sixth-largest country now. The most immediate challenge for KK is - let's become the number five in the foreseeable future. But in the end, my vision for India is, it will be one of the top three markets in the world for The Coca-Cola Company. I think it will take us a while to reach that position. The way we look at it is not to say we have every step of the journey planned out to reach number three. It is important to know the destination but very rare that you can see over the horizon what all those steps are.
I think both GST and demonetization are important steps in building the Indian economy. In the end, they are courageous and big decisions about helping to set a platform for growth. In that sense, they are good news for India and businesses that operate in India, including us. Clearly, what we are focused on is - okay, once the government has made decisions about what the rules of the game are, how do we adapt our business? Of course, we will continue to innovate, adapt to the rules and start growing it. What it takes to grow in the future is the same as what it took us to grow in the past.
Firstly, it's going to be more drinks. The second thing to recognise is, clearly there is a spectrum of disposable income in India and we need to think about what drinks work in Mumbai and what drinks work in the rural areas. And that will not just be a question of - do some of them have more fruit juices? Yes, of course there will be fruit juices. We launched a couple of them a few months ago (under the Minute Maid brand) and the most recent one (Pulpy Santra) was introduced just last week. Some of the products will be more hydration-based and then, we will get into other categories. There will also be different packaging sizes in order to make sure they are affordable in different parts of the world. In the end, we are going to follow the consumer where they go. What you see over time, around the world, is greater inclusion of local ingredients – could be fruits or whatever – to create different tastes. People are also looking for premium offerings. So it's not going to be just one direction but expansion in multiple product segments.
Around the world, we are working on reducing the sugar content in some of our products. This is being done through the three levers - smaller packages, reformulation and innovations in new products with lower levels of sugar. The same will apply to the India markets, and KK, with his team, is working on exactly what that looks like and how to do that over a period of time. Reformulation doesn't necessarily mean that the original formula will change. Some things will be reformulated, and some things - we will keep it original and classic while selling them in small packages. There is a whole architectural journey to go on to but that doesn't always involve a formula change. So don't fear, Thumps Up will still taste the same.
We are on track with the previously announced investments and there is no hesitation on our part to investing in India beyond 2020 as well. We will keep investing because it's a great country with many opportunities and future, and we can be part of this community and build a good business. Part of the good business is the circular economy work (with farmers and partners in the agriculture space for products like Mango, Mosambi, Santra fruit juices and committed $1.7 billion for creating both procurement and processing infrastructure in India) and we have been added to it for a decade now. It's an example of how we believe that creating a business is not just about creating a business but about creating value for the community. Because the business can't be successful if the community is not successful.
The manufacturing footprint across countries including in India will have to continue to evolve as the business does. In the end, it will ultimately have more capacity but what we will follow is 'what's the industrial logic'? Do we need bigger plants? Do we need plants in areas that have the best infrastructure, be it imports or the road networks? The approach is to make sure it's the most efficient possible way to service the consumers. Also, to enter new businesses we will have to invest in new capabilities that we don't have today. And we'll bring those in as well. We will do plants for advanced manufacturing. If there are other plants in the wrong locations, ultimately some of those may be closed. We may repurpose the warehouses or do something else with them. So I see a continuous evolution based on continuous investment in the footprint and trying to make it purpose fit.
We are always looking at how to expand, be it organically, our own innovations or teaming up with other people/players (looking to sell or partner). We have around the world used multiple models to expand, and of course, in India, like many other countries, we talk to people in the marketplace and explore possibilities. You'll definitely see more experimentation by us on ways to get into some of these other categories in India and around the world. When it comes to things like food, snacks or whatever we don't rule anything out in terms of expansion. But the chances are that the most intelligent things to do next is beverages and we have so much opportunity in this segment and that's where we'll focus on around the world in the foreseeable future. But, we don't rule out other things if they create value and help us build a better company.
