Coca-Cola is not unduly concerned about industrialist Mukesh Ambani-led Reliance Retail’s foray in the carbonated soft drinks market with its acquisition of the Campa Cola and maintained the competition will help to grow the category, said Coca-Cola India and Southwest Asia president Sanket ray vat a media roundtable on Tuesday.
“Ultimately, the brands have to perform and establish consumer connect; hence we are not worried. More players in the category means more investment and marketing in soft drinks which is an under-penetrated category in India,” Ray said. In September, Reliance Retail acquired local fizzy drinks brand Campa Cola from Delhi-based Pure Drinks for Rs 22 crore.
According to industry estimates, penetration of packaged soft drinks in India is among the lowest in India, leaving much headroom for brands to convert consumers from unbranded to branded drinks.
Coca-Cola, which makes Coke, Thums Up and Sprite fizzy drinks and leads the Rs 50,000-crore packaged carbonated soft drinks market in the country, is increasing its ad spends significantly as it moves to deseasonalise its business.
“We will spend more than half of our marketing and advertising spends in the second half of the year,” Ray said. The summer months of March-June continue to account for a majority share of annual soft drinks sales, and companies have been pushing strategies to keep demand going in the off-season.
For the quarter ended September 2022, the Atlanta-headquartered Coca-Cola reported 2.5 billion transactions for its India unit at affordable price points which it said was on account of returnable glass bottles and single-serve packs.
Ray said the beverage maker is pushing premiumisation with its Schweppes brand of lifestyle beverages and indulgence drinks, a trend most packaged consumer goods are following.
While consumer sentiment has picked in the last quarter with pent-up demand and the festive season, inflation continues to put pressure on household budgets in rural India.
Ray said green shoots of revival are now visible in rural markets, which so far contribute 38% to Coca-Cola’s total sales.
A recent report by ICICI Securities flagged that new launches by companies would be focused on premiumisation in the near term, adding that companies are likely to manage inflation-led disruption in mass price-points with bridge packs (or packs priced higher than entry-level ones).
Ray said Coca-Cola is following the dual strategy of expanding into multiple categories to focus on small packs to cater to consumers wanting smaller portion sizes, and premium products for occasion-based consumption.
Last week, Coca-Cola said its lemon and lime-flavoured soft drink Sprite has become a billion-dollar brand in annual sales in India, the second brand in its portfolio to touch the milestone. Ray said he expected the company’s fruit drink brand Maaza to also notch billion dollars in annual sales next. “We hope that happens next year,” he said.
For the September 2022 quarter, Coca-Cola Asia Pacific market, which includes India, saw unit case volume expanded by 9 per cent. This was driven by strong growth in India and China, the company said. Unit case volume are the number of unit cases of the company’s beverages directly or indirectly sold by it and its bottling partners to customers.