The stiff competition from Reliance-owned Campa within beverages is forcing incumbents such as Coca-Cola to buckle up and bring out its best, John Murphy, global president and chief financial officer of The Coca-Cola Company, said on Wednesday.
Speaking at a select media round table, Murphy, 63, said that no competition would make the company lazy and complacent. Murphy, who is on a week-long visit to India, also said that the country’s portfolio was strong, led by local brands such as Thums Up and Maaza, one of the only two markets, the other being Japan, where Coca-Cola was not the leading beverage brand for the company. The beverage major counts India as its fifth-largest market in the world.
“Campa is one of many competitors in India. While it is doing a good job, there are a number of local and regional players too in India. Our friends from Varun Beverages (PepsiCo bottler) are also doing a good job,” Murphy said of the landscape which is forcing Coca-Cola to cut price points and increase dealer margins to counter Campa.
Murphy is reviewing operations as well as meeting franchise bottlers, employees, sales people and partners such as the Jubilant Bhartia Group as part of his India visit. He will also undertake market visits in select regions such as Odisha as the company steps up investments across the value chain.
Experts said that companies such as Coca-Cola, PepsiCo and Campa were increasing their distribution and manufacturing muscle ahead of the summer months by focusing on increasing retail access, driving affordable points (such as 10) and pushing innovative flavours and packs. Campa, for instance, has already achieved an over 10% market share in select markets, it disclosed earlier this month. And the brand is projected to touch 1,000 crore in topline by the end of FY25 for Reliance Consumer Products.
Coca-Cola is expected to work closely with both the Jubilant Bhartia Group as well as franchise bottlers as it seeks to counter rivals in India, Murphy said. The Jubilant Bhartia Group last month had picked up a 40% stake in Hindustan Coca-Cola Beverages (HCCB), the bottling arm of Coca-Cola in India. Franchise bottlers and HCCB share a 50:50 split in terms of bottling territories. While HCCB covers largely the south and west of India, franchise bottlers cover the north and east of the country.
“We are huge believers in the power of the franchise model. It has been at the centre of value creation for a long time for us. While we have gone through iterations in the last few years, our stated objective is to refranchise some of the bottling operations we own in markets such as India. Our bottling operations here are consistent with that strategy, where we are investing with partners who have the same ambition and vision as us for the industry,” he added.
Murphy also said that the urban slowdown in India was a “temporary phenomenon” and that it was looking to the upcoming Union Budget to address slowdown concerns within urban areas. “The relative strength of rural areas that is flowing through for FMCG companies, present a huge opportunity for Coca-Cola in India. The evolving retail channel dynamics as q-commerce grows here is something we are watching closely as we adapt to stay ahead,” Murphy said.
Murphy also said that the company was looking to increase its presence in premium spaces within tea and hydration. At the same time, it would look to counter PepsiCo’s domination in energy drinks with more offerings at the value end of market, where the former has Sting Energy. Coca-Cola has Charged by Thums Up within energy drinks.