James Quincey, the global chairman and CEO of The Coca-Cola Co, is set to lead a 220-member company leadership team on a visit to India this week, according to executives familiar with the plans. This underscores New Delhi’s increasing importance for the Atlanta-headquartered beverage giant as it seeks to boost sales in mature markets like the US and Europe.
India, boasting the world’s largest population and a youthful demographic, stands as one of the top five priority markets for volume growth for the manufacturer of Coca-Cola, Sprite aerated beverages, Minute Maid juices, and Kinley bottled water.
“The executives are keen on meeting the government brass,” said one of the executives cited above. “They will also be engaging with bottling partners that now operate close to half of Coca-Cola’s bottling business in India – and are crucial since they will infuse capital into the business.”
The teams are scheduled to meet in Goa. Alongside Quincey, the company’s president and CFO, John Murphy, and the global chief marketing officer, Manuel Manolo Arroyo, are leading the teams of Coca-Cola officials.
“India is gaining prominence in global system due to strong earnings over the last two years. There are significant investments into building capacity, and the focus is now on ensuring growth is balanced with profitability,” said one of the executives cited above.
India is considered a core growth target due to the low penetration of packaged soft drinks in the country. However, beverage makers remain concerned about the taxation of aerated drinks. Despite being priced at INR 10 and above, soft drinks are classified in the same tax bracket as alcohol. Under the GST regime, carbonated drinks attract a peak GST rate of 28%, along with an additional 12% compensation cess.
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In an earnings management commentary following the December quarter, Quincey stated that Coca-Cola’s business in India experienced “strong growth throughout 2023” despite climate disturbances.
“A significant portion of our expected capital investment increase is to build capacity for our India business and Fairlife (Coca-Cola’s dairy business),” Murphy said during the fourth-quarter and full-year earnings call last fortnight.
In December 2023, Coca-Cola’s regional bottling partner, Hindustan Coca-Cola Beverages (HCCB), unveiled plans to invest INR 3,000 crore in Gujarat for the production of juices and aerated beverages.
In its full-year earnings presentation, The Coca-Cola Co highlighted India and Brazil as leading growth markets in developing and emerging economies throughout 2023. The company noted an augmented value share in the Asia-Pacific region, primarily driven by India, the Philippines, South Korea, and Japan. However, specific market share gains were not disclosed.
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Throughout the full year, developed markets saw a 1% growth, with decreases observed in the US and Chile. Conversely, developing and emerging markets experienced a 2% expansion, fueled by the growth witnessed in India and Brazil, as stated by the beverage company.
According to financial data obtained from the business intelligence platform Tofler, Coca-Cola India’s consolidated profit surged by 57% to INR 722 crore in FY23, while revenue from operations rose by 45% to INR 4,521 crore.
An economic policy think-tank, ICRIER, projected that India’s non-alcoholic beverage market would grow to INR 1.47 lakh crore by 2030, a substantial increase from INR 67,100 crore in 2019. The report highlighted carbonated soft drinks and bottled water as the primary contributors to the non-alcoholic beverages sector. Additionally, it emphasized the expanding market for juices, energy drinks, tea, milk, and coffee-based beverages, indicating significant potential to boost consumption of packaged drinks.