Coca-Cola puts a break on its bottling plant in UP

Soft-drink company, Coca-Cola plans to launch frozen desserts in India as the beverages giant looks to expand its portfolio beyond carbonated drinks into fruit-based or other healthier choices.

According to officials, "The new product will be available in the next three months, and initially sell in institutional formats such as movie theatres, and not as retail packs. The company will also put fruit chunks in Maaza and Minute Maid to make the drinks healthier."

The new product range will challenge the dominance of Hindustan Unilever and Amul in the Rs 10,000 crore ice-cream segment.

T Krishnakumar, President, India and Southwest Asia, Coca-Cola, announced that it will invest Rs 11,000 crore in creating an agriculture-focused ecosystem, food processing units and sourcing that will help it introduce a slew of innovative products in the fruit-based categories within the next five years.

Ishteyaque Amjad, Vice-President, Public Affairs & Communications, Indian and South West Asia, Coca-Cola, said, "We are committed to creating a ‘Virtuous Circular Economy’ for sustainable agriculture and provide a forward linkage to the Indian farmer. This can be broadly put under four major initiatives — adding juice to our sparkling portfolio, enhancing local fruit variants within our existing juice portfolio, launching a new range of products, and exporting Indian fruits to our global systems." 

Coca-Cola India replaced Venkatesh Kini with T Krishnakumar as Coca-Cola India President.

The timing of the change, in the middle of the critical peak season for cola companies, was a surprise. The summer months of the April-June quarter contribute over 40 per cent to annual soft drink sales.

Krishnakumar is currently chief executive of Hindustan Coca-Cola Beverages (HCCB), the bottling arm.

Christina Ruggiero will succeed Krishnakumar at HCCB, becoming the unit’s first woman CEO. She’s currently CEO for bottlers’ sales and services at Coca-Cola System (North America). The changes are effective May 1.

James Murphy, President, Asia Pacific Group, said, "This is a very important period in our company's transition globally."

The company has seen at least six quarters of low single-digit growth in what it regards as a key market. Murphy said he expected Coca-Cola to return to double-digit growth over a threeyear period, adding that non-cola beverages would contribute "significantly" to expansion.

He said, "We believe India is one of the few markets in the world that can materially change our systems. Our focus is to come up with more consumer-oriented businesses and a stronger total beverages portfolio, spread in multiple categories, particularly in the developing markets."

Irial Finan, President, Bottling Investment Group (BIG), said, "The Indian market has tremendous growth potential and we believe revitalising the system leadership structure will enable us to continue consolidating India as one of the most important growth engines for the company globally."

Murphy said, "The Company’s top priority is to 'create and deliver growth'. As outlined by our president and COO James Quincey a few weeks ago, The Coca-Cola Company is designing a new operating model to support the next stage of transformation into a growth-oriented, consumer-centred, total beverage company."

Muphy added, "We will wait and see how the final recommendations come through (on taxation). It's no secret that we have made representations to the government and made our point of view known to the importance of having a fair approach when it comes to taxation. We are one of the largest tax payers in India in the category. We appreciate and understand very well the overall objectives of the government. But we would like to see taxation being rolled out in a fair manner so that we are not singled out."

Coca-Cola, one of the world's largest beverage companies, has embarked on a restructuring exercise that is likely to affect a large chunk of its senior management, company sources said.

A senior Coca-Cola India executive said, "It started off with Coke CEO-designate James Quincey easing out Atul Singh, currently chairman of the Asia-Pacific group, and bringing in John Murphy in his place, in May last year. Singh will retire from the company in March."

He said sales of fizzy drinks in the country are slowing down due to high taxes and consumers opting for healthy beverages. Around 70 percent of Coca-Cola’s sales comes from fizzy drinks. "The company’s performance in India is under scrutiny," the executive said.

Right after Singh’s transfer, Sarvitha Sethi was brought in from Europe to replace Sanjeev Kumar as Coca-Cola India’s CFO. Last month, Manu Narang Wadhwa was roped in from Amex as the company’s HR head. She replaced Sameer Wadhawan, who was given the responsibility of heading a newly created function to help Coke’s bottlers in India get digital-ready.

Subsequently, Sumanta Datta, VP of Coke India’s bottling operations, was made VP of South West Asia (Bangladesh, Sri Lanka, Nepal, Bhutan and the Maldives), a region which does significantly lower volumes than this country. Similarly, Coca-Cola India franchisee bottling operations VP, Bhupendra Suri, is relocating to Nigeria.

Apart from them, other leaders at the company who are likely to get new roles are Deepak Jolly, VP, venturing and emerging brands, and Debabrata Mukherjee, VP, marketing and commercial. These are all core team members of Venkatesh Kini, president, Coca-Cola India and South West Asia. When asked about the current restructuring exercise, a Coca-Cola India spokesperson said, “This is speculative and has no connection with the truth.” Murphy, president, Asia-Pacific group, Coca-Cola, who took over from Singh, is flying down to India this month. Murphy reports directly to Quincey, president and COO of Coca-Cola, who will succeed Muhtar Kent as Coke’s global CEO this year.

Apart from replacing Singh, Quincey shook up the entire Coke hierarchy in May, easing out veterans and ushering in new hands. In a Q&A on Coke’s website, Quincey said the restructuring will streamline Coke’s operations and bring “freshness” to markets. “A fresh pair of eyes is a good thing; stability is also a good thing. It’s important to strike a balance between those two,” he said.

Coca Cola, an American carbonated soft-drink company, which has planned to manufacture its products using orange pulp in two of its plants in India. It would also promote NOGA (Nagpur Orange Grower Association) brand, a subsidiary of Maharashtra government, which is well-known in Vidarbha region.

The Maharashtra government inked a tripartite pact with Hindustan Coca-Cola Beverages Private Limited, the largest bottling partner of the soft drink major, and Jain Irrigation Company, during its 'Make in India' event in Mumbai in February. It proposed setting up 'Oranges Unnati Project' on 100 acres on public-private partnership. The Butibori plant would manufacture juices, with a mixture of Vidarbha oranges and Marathwada's sweet lime.

According to minister of state for industries, mining and environment Pravin Pote-Patil, "A number of employment opportunities would be generated, once the plant starts functioning, in a couple of years. They have started its set up. Importantly, the oranges would be in demand and its growers would be ultimately benefited."

Orange could be used not only in beverages, but also for producing jam, sauce and even wine, the source said.

Sources close to his ministry said the company would help farmers to cultivate and increase the yield with the help of new scientific techniques like ultra high density plantation. They said growers would also be provided classroom training and demonstrations.

Sources said the oranges would see more demand once the soft drink giant starts using it in products. Every year, the growers face huge losses on account of poor demand for oranges, forcing many of them to switch to other crops.

The Indian Beverage Association, which represents PepsiCo and Coca-Cola, is disappointed for the re-categorization of aerated drinks in the luxury category under the GST rate slabs announced by the GST Council, as per the reports published by the GST Council.

The statement says, "The viability of the industry could be in grave danger because of such an adversarial tax approach."

As the report says, a cola industry official, said, "If there is an additional cess on the category over and above the 28% GST rate, it’s going to have a severe impact, as that will lead to consumer price hikes of as much as 20% and kill the industry."

Statement issued by IBA reads, "At Rs 10 for 200 ml, aerated drinks are neither luxury goods nor do they carry the kind of health hazards attributed to them. Aerated drinks are not ‘sin’ goods as the Union Government itself had accepted earlier and there are observations by the court on the basis of the report of an expert panel that the ingredients present in aerated drinks do not pose any health hazard."