Coke plans to put into more fizz into India biz

Coca-Cola India continues to script its turnaround story. With unit case volumes registering double-digit growth for the past five successive quarters, Coke has earmarked an incremental investment of USD 250 million over and above the USD 1 billion it has already brought into the country.

Like its competitor Pepsi, Coke is also trying to capture the non-carbonated market.

Muhtar A Kent, Global CEO, is all set to take over from Neville Isdell as Coke’s CEO next July. Incidentally, this is the first time Coke will split the role of the CEO and Chairman with Isdell staying on till 2009. (At present his designation is President & COO, Coca-Cola, USA)

So how much fizz will Coke put into the non-fizz business?

Excerpts from CNBC-TV18's exclusive interview with Muhtar Kent:

Q: You have made several visits to India and things seem to be turning around as far as the cola controversy is concerned, how much of that has actually impacted Coke in India?

A: We learn from our operations all the time in all the markets as we do in this great market here. We are happy with our progress that our business is making here in India for the past year, and we look forward to many years of sustainable growth.

Q: What has been the biggest lesson as far as you are concerned from this entire pesticide-cola controversy? What has been the biggest learning for Coke, not just in India, but perhaps globally and on dealing with activists, dealing with NGOs and perhaps as what you called dealing with Directed Activism?

A: We believe in one thing that is really important for us i.e. we work with civil society, we work with NGOs, we work with governments they are all important stakeholders in our business. We learn from there, work closely with them in ensuring that we have a sustainable society in the country.

Q: How sustainable is business in India at this point in time and how important is India market in terms of revenues to go globally? Where do you see India stacking up because the numbers in China are very different, aren’t they?

A: India is a very important market even today. But as we look into the future, it is obviously even much more important market because India is progressing as an economy, as an emerging market. It is growing and we are looking forward to growing with India for many more years to come. India is an important generator of our global growth, and also in terms of total size of market, it is important for us.

Q: India is a sourcing hub as far as fruit pulp etc is concerned, given the fact that the company is trying to move away from just being a cola company to a non-cola company as well to a healthier company, you have often talked about developing rural hubs in India, how far has that gone?

A: Firstly, I want to stress that we are not moving away from our sparkling beverage business. We now see ourselves as a global player in non-alcoholic ready-to-drink, in all categories, and not for the reason that sparkling beverages are unhealthy in any way, but because there is opportunities in the total spectrum of non-alcoholic ready-to-drink. In India, juice and juice drinks are an important part of our portfolio.

Q: What is the plan as far as the non-carbonated side of the business is concerned, because both Pepsi and you are going very big on that side of the business?

A: We already have plans that we are implementing. Maaza juice is an important part of that portfolio. Our new introduction, new innovation which is Minute Maid Pulpy, which is also doing very well in the marketplace, although it is early days still, and we are going to expand upon that portfolio in terms of other categories, but also in terms of juice and juice drinks category in other flavours.

Q: Do you see that as a faster growing segment, the non-carbonated side?

A: Today our business is growing at double-digits over the past year and QoQ and we are growing in a balanced way.

Q: How about acquisitions, how significant is inorganic growth as part of a strategy to have a more balanced portfolio?

A: Let me stress a very important point. We don’t believe that acquisitions can be a replacement for organic growth. You must generate organic growth in a healthy sustainable fashion. Then whenever you get opportunities on a local basis for bolt-on acquisitions and certainly the world has seen us do a lot of those bolt-on acquisitions, both in Europe, Latin America, Asia, and in many parts of the world. We continue to ensure that we capture those opportunities.

Q: What about the water business in India?

A: We are happy with all the categories in India we are operating in, in our portfolio. They are gaining share of the market and growing.

Q: How does India stack up against other emerging markets? Is this the fastest growing market?

A: India is one of our fastest growing markets; but we also do have quite a number of emerging markets that are generating double-digit growth. And India is certainly one of those.

Q: Are there any concerns on the regulations because post the cola pesticide controversy we have moved towards more stringent regulations, the government is considering further strengthening those? Any concerns on that front?

A: We are working very closely with the government, with all appropriate bodies to ensure that there are regulations in India for all the different categories of beverages in terms of different requirements because we welcome those. We are certainly very much abiding with any regulations and in total sync with all the regulations.

Q: Do you think the regulatory environment in India on account of the pesticide controversy is perhaps giving more cause for concern as opposed to other countries at this point in time?

A: We are not concerned in any way.

Q: What would the investment number into India be over the next couple of years?

A: We have over a USD 1 billion of investment into India right now and over the next 3 years you will see us investing about USD 250 million more at least.

Q: You have a deep India connection; you spent a couple of years here while you were a child growing up?

A: I did, I have great memories of this wonderful country. The sense that I get every time I come to India is that this is such a vibrant place, and it is a place where the world could learn about momentum.

Q: So what would the cornerstone be of the new Coke philosophy?

A: The new Coke philosophy is very simple; ‘We have to always provide the best for our consumers and for our customers.’

Q: And it is going to be beyond just colas?

A; It is already.