Coca Cola Plans 740 Million Dollar Investment in India

By SHAHID AHMED KHAN

CALCUTTA: The Atlanta-based global soft drinks giant, the Coca Cola company, has envisaged a 740 million dollar plan to firmly establish itself in India, identifying it as one of the most strategic markets with 'phenomenal potential,' for the company's future development.

Coca Cola, which re-entered India three years ago through its wholly owned subsidiary, Coca Cola India, wants to make its Indian operations a corner-stone of its global business, according to Jimmy Mogal, Senior Manager External Affairs, Coca Cola India.

The main emphasis of the company at present is to invest in and develop soft drinks production and distribution infrastructure, at par with most developed markets of the world, since "our focus is on the long term benefits", Mogal told Press Trust of India here February 25.

He said that India has already given the green signal to Coca Cola India for its investment plans, including the upgrading of facilities of the existing bottling units country-wide at a cost of $700 million and setting up a new canning and bottle manufacturing unit in Gujarat at a cost of $ 40 million.

Coca Cola's decision to go full throttle for the Indian market probably stemmed from arch rival Pepsi 's recent announcement to fully concentrate on the soft drinks business after suffering heavy losses in its fast food businesses--Kentucky Fried Chicken, Pizza Hut and Taco Bell. Pepsi announced its decision to concentrate only on the soft drinks and snacks business.

Mogal said the Indian market had its own characteristics as it was highly consumer-oriented and quality conscious and had phenomenal potential considering the population of the country.

Though Mogal conceded that Pepsi was going for aggressive marketing in India, at the same time, there was still great potential for growth, as the size of the Indian soft drinks market at present was hardly around 150 million cases per annum, which was nothing in a country with population of 900 million.

The per capita consumption of soft drinks in India was only two ounces, which was too low. Even a rise of one ounce in per capita consumption would be difficult for the entire industry to cope with, Mogal said.

Coke was, however, on top in the Cola war, as the financial results of the two global giants have confirmed Coke's superiority the world over.

Coca Cola has posted a record net income of $3.5 billion in 1996 with a growth rate of eight percent the world over and a 19 percent increase in earning per share during the year.

Coca Cola's Indian operation during 1996 has been remarkable as the company achieved a 28 percent growth and captured 60.7 percent of the market with its portfolio of seven brands, Mogal said.

In contrast, Pepsi suffered badly and in the fourth quarter of 1996 its profit slumped by 85 percent to 28 million dollar, due to losses in international beverage sale and fall in businesses of its subsidiaries like Pizza Hut and Taco Bell. (PTI)

Copyright © 1996 IndiaWeb Post. All rights reserved.