Coke sees fizz in rural India

NEW DELHI: For beverage maker Coca-Cola, it is India's hinterland that is proving to be the new hotspot, with the company expecting its growth in rural areas to exceed growth in cities. While cities continue to constitute a majority share of the sales, it is the rural areas that will register faster growth in the "foreseeable future", a company executive said.

"Cities have developed. The real growth is coming from small towns," said Venkatesh Kini, the recently appointed senior vice president for operations at Coca-Cola India. With the summers setting in, the top beverage maker is gearing up for an extensive plan, involving expanding its distribution network and introducing non-standard pack sizes to cater to consumers in this segment. From 2.2 million outlets in the country that Coke currently reaches, it is now targeting a presence through 2.4 million outlets.

The company, which recently introduced its Rs 8 price point for Coke in newer markets, said it is also open to play with pack sizes for brands other than Coke in its portfolio. "If there is an opportunity to do it with other brands, we will do it. We want to work on segment based augementation," Kini said.

Despite introducing variations in pack sizes, experts say most of these initiatives have not been taken up on a national scale. For instance, masala cola drink RimZim, which was relaunched in August last year, has remained confined in the Haryana region. The company has also recently launched entry level price products for its brands Maaza in Uttar Pradesh and Minute Maid. "When we are absolutely certain about everything starting from the supply chain, only then we will take a product ahead," said Kini.

Coca Cola registered a 16% volume growth in India in 2012, registering 26 consecutive quarters of continued growth. With arch rival PepsiCo investing heavily on marketing through the IPL front to make the most of the season, experts say Coca-Cola too will have to leverage on below-the-line activities along with product innovations. Especially with the seasonality factor for beverages blurring, experts say marketing and advertising are no longer confined to the first half of the year.

However, the company continues to remain unfazed. "Our approach to marketing is long term and for 365 days a year...we already started advertising for some of our brands in December. To me, IPL is playing the role we wanted it to play in our advertising mix," he added.

Paritosh Ranjan 
2sem PGDM