Coca-Cola makes big plans for Indian market to keep up with rival PepsiCo

According to Edward Neville Isdell, the chief executive of the world's largest non-alcoholic beverages manufacturer, Coca-Cola is keen to make India one of its top ten markets in the world in terms of volumes and it will not hesitate on injecting funds to expand its Indian operations. "We are bullish on India. It is a matter of stimulation...as the growth comes, you have to put in incremental investments," Isdell said, in an interview with Economic Times.

"We are investing $250 million. This will not be the last. More investments will come," he added. Coca-Cola has already spent $1.2 billion over the last decade to strengthen its distribution and marketing infrastructure.

Admitting that rival PepsiCo's CEO Indra Nooyi "drives us to compete very hard," Isdell said India, which is one of the fastest growing soft drinks market in the world, poses a challenge to the soft drinks giant to "maintain and accelerate growth."

"India is growing phenomenally…It is about putting the basics together and removing the drags on growth. Constant rebuilding is also significant to increase the market share and widen our presence. All this should have a clear focus," Isdell said, adding heavy responsibility rests on the shoulders of Atul Singh, head of Coca-Cola India.

"Pepsi is slightly ahead of us. But the issue is total business. Cola-to-cola, we are ahead. Every sub-category like lemon and orange, we are ahead. Four out of top five brands are ours," he said.

According to Isdell, Coca-Cola is "now profitable in terms of both operating and net profit" and has set its sight on emerging markets like India and Latin America to fuel its growth. "With strong growth in emerging markets, like India and Latin America, and the benefit of a weak dollar on our side, we should achieve good global growth this year," he said.

And, to make sure that it can keep up with the demand for non-alcoholic beverages this summer, the company has set up a new manufacturing facility for its fruit juice line at Nabhipur in Rajpura district of Punjab.

Coca-Cola is also set to launch a slew of new products, ranging from an 'aam panna' variant for its mango drink Maaza to more sports and energy drinks, and is targeting different segments of consumers. And, for those who watch their calories, the company, which boasts that "Coke Zero have been in top 10 most successful launches," is working on a natural, non-nutrient sweetener with Cargill.

The soft drinks giant is also sparring with PepsiCo in the advertising segment. To reach out its products to the 1 billion-plus people of India, Coca-Cola has pitted popular Bollywood actor Hrithik Roshan against PepsiCo's brand ambassador, Shah Rukh Khan.

And, with the much-anticipated Twenty20 cricket tournament, the Indian Premier League (IPL), round the corner, both companies have splurged millions of dollars to bag prime time advertising rights. While PepsiCo has spent Rs.45 crore ($10.5 million) to become the official beverage partner of the IPL for a five-year term, Coca-Cola has spent about Rs.20 crore ($5 million) for a one-year contract with IPL to become its on-air associate sponsor. In other words, though viewers will see the brand Pepsi plastered all over the ground, on beverage carts and during the awards ceremony of the IPL, Coca-Cola will get exclusivity during commercial breaks i.e. PepsiCo will not be able to advertise its products during commercial breaks.

"The car is back on the road, though it's not going fast enough," summed up Isdell. "We have arrived in India. But we have not arrived to the level where we want to."

However, there are a few speed breakers on Coca-Cola's road to success.

The ghost of the past appears to have caught up with the company with 1500 villagers recently protesting against the company's bottling plant in Mehdiganj, Varanasi, for creating severe water shortages in the area and polluting the water and land. Adding to the controversy, the Uttar Pradesh State Pollution Control Board also said that the bottling plant did not have a proper hazardous waste authorization certificate obtained from the Board which is necessary to operate the plant.

Moreover, the Energy and Resources Institute (TERI) which conducted an assessment of six Coca-Cola plants, suggested in its report, released in January 2008, that Coca-Cola's bottling plant in Kala Dera, Rajasthan be shut down because of the acute water shortage in that region.

Incidentally, Coca-Cola India had recently joined hands with top industry chamber Confederation of Indian Industries (CII) (Northern Region) to launch water conservation and management project that will promote industry awareness and engagement on rainwater harvesting and community water conservation programs in India.

And, that is not all. Finance Ministry figures reveal that Coca-Cola is one of the several multinational companies that owe tax to the government. A government task force, which has been set up to recover the tax arrears in cases involving large sums, said Coca-Cola owes Rs.424.75 crore ($106.2 million).

The 121-year old Coca-Cola Company is the largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world, and one of the largest corporations in the United States. It is headquartered in Atlanta and reported earnings of $28.9 billion in 2007. Its flagship product, Coca-Cola, is the best-selling soft drink in most countries in the world.