Coca-Cola India, the country’s largest beverage company, said on Friday that its bottling arm would transfer operations in three regions to existing partners. The move is part of a larger strategic shift to focus on brands, in line with its global policy for asset-light operations across markets.
Rival PepsiCo India has a similar global strategy, having refranchised all its India bottling operations to the Ravi-Jaipuria-led Varun Beverages a few years ago. The latter is PepsiCo’s second-largest bottling partner in the world outside the US.
Hindustan Coca-Cola Beverages (HCCB), the bottling arm of Coca-Cola India, will divest its operations in Rajasthan, Bihar, North-East and parts of West Bengal to three franchise bottlers: Kandhari Global Beverages, SLMG Beverages and Moon Beverages, respectively.
HCCB, whose FY23 turnover was Rs12,840 crore, still runs 16 factories in India, bottling various Coca-Cola brands. In the last two years, HCCB has also announced plans to set up new plants in Gujarat, Telangana and Maharashtra, among other states, at an investment of over Rs7,300 crore.
Yet, HCCB has been refranchising its operations to independent bottlers, with half its business now run by third-party bottlers, sector experts said. Kandhari, for instance, already runs bottling operations for Coca-Cola in Delhi, Himachal Pradesh, Haryana, Punjab, Chandigarh, Jammu & Kashmir and Ladakh. SLMG Beverages has operations in Uttarakhand, parts of Uttar Pradesh and Bihar and Madhya Pradesh. Moon Beverages runs operations in parts of Delhi and Uttar Pradesh.
Juan Pablo Rodriguez, CEO, HCCB, said, “This business transfer will ensure the right level of investments that can be undertaken in all parts of the business, while bringing both scale and contiguity.”
The company is in the long-term growth prospects of its beverages business in India and this move “will help accelerate the Coca-Cola system”, he said. Varun Beverages, whose FY23 turnover was Rs13,212 crore, has been consolidating its presence overseas as one of PepsiCo’s key bottling partners, having announced the acquisition of South Africa-based The Beverage Company (Bevco) for Rs1,320 crore last month.
It already operates in foreign markets like Nepal, Sri Lanka, Maldives, Morocco, Zambia and Zimbabwe. It is setting up a greenfield bottling unit in the Democratic Republic of Congo and has recently established a subsidiary in Mozambique. In India, it has bottling operations in 27 states and seven Union territories.