Coca-Cola India to flavour a bigger portfolio with ethnicity
, ET Bureau|
Updated: Oct 28, 2017, 01.05 AM IST
NEW DELHI: Coca-Cola India is expanding its product portfolio with ethnic drinks and additions for the local palate, in the beverage maker’s latest move to tackle the challenge from regional brands under its new president, T Krishnakumar.
“The journey in India is work in progress; we’ve got on to the right track. The momentum of the third quarter has been satisfactory,” Krishnakumar told ET in an interview.
In juices, Coca-Cola has brought in a hyperlocal range and multiple pack options, while in sparkling drinks, it is scaling up entry-level packs in 180-ml cans and 250-ml PET bottles, which it believes will bring back consumers. It has also dabbled with ethnic flavours in carbonated soft drinks (CSDs), such as ‘jeera’ drink ‘RimZim’ and the grape-flavoured ‘Portello’.
Besides fruit drinks, it is testing frozen desserts and flavoured hydration drinks. It is also exploring low-sugar options of its carbonated beverages across brands.
The maker of Sprite and Thums Up – the country’s top two aerated drinks – is now pushing localisation to the last mile. “We’ve said we will convert every mango grown in the country into a beverage. There’s this consumer trend where people like to relate to what they are drinking — we’re trying to capitalise on it,” Krishnakumar said.
Coca-Cola India, which posted 16% revenue growth for the September quarter, has been doing things more intensely and faster, Krishnakumar said. “Bringing in more variety in fruit based beverages that has brought in momentum. Rejuvenated distribution of our sparkling portfolio has gained traction. We need to keep doing more of this,” he said.
The Rs 22,000-crore soft drinks category has been grappling with low-single-digit growth for close to two years now, with consumers switching to healthier, localised beverages.
“We assessed the situation in the first quarter of this year and realised that somewhere we were not really trying to get our act right in understanding what the consumer wanted,” said Krishnakumar. “The consumer was moving into a lot of customisation; there were smaller players giving consumers that customisation; we were still in the era of creating national brands. Second, we missed the fact that consumers were looking for ethnicity. There were so many small brands offering that and growing. We thought this was a fad and did not really respond to that. As we were going through this process of handling multiple competitors coming in with small offerings, having greater consumer connect, we had a few macro headwinds, namely, demonetisation.”
India, the US beverage giant’s sixth largest market, was among the fastest organically growing FMCG companies for almost a decade before it hit a slowdown. “Sometimes we didn’t act fast enough. Once we recognised the trends, we started responding to them. One of that is the fruit-based approach. We went down and worked with farmers. The circle between the farmer and industry really improved and we catalysed it,” he said.
With the new approach, Coca-Cola is hoping to establish a stronger connection with consumers. “If you have fruits growing only in your area, and if you have a beverage based on that, it obviously gives you good connect. It is important for us to recognise this,” Krishnakumar said, adding that it has also helped the company get back its earlier confidence in the beverage business, which has resulted in renewal of growth. “In a way, it also helps to target smaller brands. When we do this, it gives us the right to win in that marketplace,” he said.
However, the company doesn’t intend to dilute focus on its core portfolio. Stills have outgrown CSDs by a substantial amount in the quarter, with growth being in double digits for fruit-based products, and mid-single digits for CSDs. “But we will market CSDs in the same way as we did before.… salience doesn’t change overnight,” he said.
“The journey in India is work in progress; we’ve got on to the right track. The momentum of the third quarter has been satisfactory,” Krishnakumar told ET in an interview.
In juices, Coca-Cola has brought in a hyperlocal range and multiple pack options, while in sparkling drinks, it is scaling up entry-level packs in 180-ml cans and 250-ml PET bottles, which it believes will bring back consumers. It has also dabbled with ethnic flavours in carbonated soft drinks (CSDs), such as ‘jeera’ drink ‘RimZim’ and the grape-flavoured ‘Portello’.
Besides fruit drinks, it is testing frozen desserts and flavoured hydration drinks. It is also exploring low-sugar options of its carbonated beverages across brands.
The maker of Sprite and Thums Up – the country’s top two aerated drinks – is now pushing localisation to the last mile. “We’ve said we will convert every mango grown in the country into a beverage. There’s this consumer trend where people like to relate to what they are drinking — we’re trying to capitalise on it,” Krishnakumar said.
Coca-Cola India, which posted 16% revenue growth for the September quarter, has been doing things more intensely and faster, Krishnakumar said. “Bringing in more variety in fruit based beverages that has brought in momentum. Rejuvenated distribution of our sparkling portfolio has gained traction. We need to keep doing more of this,” he said.
The Rs 22,000-crore soft drinks category has been grappling with low-single-digit growth for close to two years now, with consumers switching to healthier, localised beverages.
“We assessed the situation in the first quarter of this year and realised that somewhere we were not really trying to get our act right in understanding what the consumer wanted,” said Krishnakumar. “The consumer was moving into a lot of customisation; there were smaller players giving consumers that customisation; we were still in the era of creating national brands. Second, we missed the fact that consumers were looking for ethnicity. There were so many small brands offering that and growing. We thought this was a fad and did not really respond to that. As we were going through this process of handling multiple competitors coming in with small offerings, having greater consumer connect, we had a few macro headwinds, namely, demonetisation.”
India, the US beverage giant’s sixth largest market, was among the fastest organically growing FMCG companies for almost a decade before it hit a slowdown. “Sometimes we didn’t act fast enough. Once we recognised the trends, we started responding to them. One of that is the fruit-based approach. We went down and worked with farmers. The circle between the farmer and industry really improved and we catalysed it,” he said.
With the new approach, Coca-Cola is hoping to establish a stronger connection with consumers. “If you have fruits growing only in your area, and if you have a beverage based on that, it obviously gives you good connect. It is important for us to recognise this,” Krishnakumar said, adding that it has also helped the company get back its earlier confidence in the beverage business, which has resulted in renewal of growth. “In a way, it also helps to target smaller brands. When we do this, it gives us the right to win in that marketplace,” he said.
However, the company doesn’t intend to dilute focus on its core portfolio. Stills have outgrown CSDs by a substantial amount in the quarter, with growth being in double digits for fruit-based products, and mid-single digits for CSDs. “But we will market CSDs in the same way as we did before.… salience doesn’t change overnight,” he said.
