Coca-Cola India: Thums Up to growth

The buzz about Coca-Cola India’s nine straight quarters of growth is getting louder. There’s brisk offtake of its nine brands and all of them have become market leaders, according to market research data compiled by The Nielsen Company. Kinley, its water brand, has just inched up to the #1 spot at the retail end (which excludes the bulk-pack, inhome consumption of water, where Bisleri still leads).

It’s a sustained, though late, vindication for a company that has invested $1.2 billion (Rs 5,880 crore) in India since it re-entered the market in 1993 after a gap of 16 years. “When I came back again to take charge of the India operations three years ago, the business was certainly not in a good shape. Our bottling operations were not healthy, losses were mounting, employee morale was low and we were facing a 30 per cent attrition rate. There were also health concerns and many false allegations were sticking because we were not doing well,” says Atul Singh, President & CEO, Coca-Cola India. To understand the achievement of the company, the context is relevant as Coca-Cola India has had to struggle to find its feet in this market. The strongest criticism of its marketing strategy came in the wake of its decision to invest in its own brands rather than Thums Up and Limca, the leading domestic brands it acquired from Ramesh Chauhan’s Parle in 1993.

However, after a decade, it finally found its voice in early 2000 with its “Thanda matlab Coca-Cola” ads, only to be done in by the pesticide controversy and also its decision to offer Coke at Rs 5 (which, however, worked wonders for its popularity).

Challenge: Grow all its brands, make bottling operations viable and earn profits Strategy: Raised price of Coca-Cola from Rs 5 to Rs 8; widened distribution reach Outcome: Has achieved volume growth and has become profitable

In line with the global vision laid out by the then Coca-Cola CEO Neville Isdell, Singh put together a road map based on the Manifesto of the five Ps (Portfolio, Partners, Profits, People and Planet). “We had to make the business profitable for our bottling partners and, eventually, ourselves. We decided to cut out unnecessary expenditure on marketing that was not working and focus on the needs of consumers. We also took the hard decision to increase prices,” says Singh.

In addition, Coca-Cola India has widened its distribution reach and built a portfolio of brands that also offer variety in its packaging innovations. As a corollary— and ironically—Thums Up, the #1 cola brand in the country, accounts for the largest share of its promotional budget. Result: Coca-Cola India has recorded an 18 per cent increase in sales volumes in the July-September quarter this year and its sparkling and fruit drinks command a 57 per cent market share in the Rs 6,000-crore segment. Clearly, its marketing efforts are reaping the company a rich harvest.

—Shamni Pande