Make profitability the priority, Coke COO tells India team

Make profitability the priority, Coke COO tells India team

Beverage maker Coca-Cola‘s global president and chief operating officer (COO) Brian Smith has directed the India management and its bottling partners to make profitability their key priority.

On an India visit this week, Smith in an address told bottlers and employees to accelerate distribution in away-from-home channels as most of the country has fully reopened, improve cost efficiencies, and push volumes in smaller emerging tier 2 and 3 markets, two officials directly aware of the developments said.

Smith is the second most senior executive in Coca-Cola’s globe hierarchy, and reports to company chairman James Quincey.

An email query sent to Coca-Cola India’s spokesperson remained unanswered till press time Tuesday.

The Coca-Cola COO’s stress on profitability comes at a time when corporates across sectors are facing a steep inflationary environment, with raw material and fuel costs at record high levels.

Globally, Coca-Cola reported 6% growth in unit case volume in the September quarter, outpacing sales in 2019, which it attributed to developing and emerging markets such as India, China, Russia and Brazil.

“Growth was driven by India and China, partially offset by pressure in Southeast Asia due to the impact of the pandemic,” the Atlanta-based company said in an earnings statement.

Within the Asia Pacific market, its unit case volume grew 3% in the quarter under consideration.

The company said it saw “solid performance” by its fruit drink brand Maaza in India. Apart from in-home consumption, the maker of Coca-Cola and Thums Up colas and Minute Maid juice said it is recovering in out-of-home channels, as travel picks up, and hotels, restaurants and bars open.

In its detailed earnings statement, the company said Coca-Cola India is emerging stronger on the back of strong recovery in “away-from-home” channels with improved mobility, focus on affordability and omni-channel growth.

The next summer is crucial for soft drinks, as two consecutive summers for the sector were hit significantly as they coincided with lockdowns and peak Covid-19 wave, impacting impulse consumption at theatres, college campuses, hotels, restaurants and cafes. The April-June period contributes more than half the annual sales of the ₹20,000 crore organised packaged beverages category in the country.

India is a core market for Coca-Cola, with low penetration of packaged soft drinks leading to huge headroom for growth, and conversion of consumption from unorganised to packaged soft drinks.

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