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Tag: Thums Up

  • The global chairman and CEO of beverage maker Coca-Cola announced investment of $3 billion (approx Rs17,000 crore) over an eight-year period

    It’s wrong for us to say that India is slowing down: Muhtar Kent, Coca-Cola

    Muhtar Kent

    By A Correspondent

     

    Unfazed by the economic slowdown and talks of policy paralysis, Muhtar Kent, global chairman and CEO of beverage maker Coca-Cola, on Tuesday announced a fresh investment of $3 billion (approx Rs17,000 crore) over an  eight-year period for expanding its bottling, cooling, and distribution operations as well as accelerating its pace of growth in India.

     

    “Whether or not the government makes policy changes, we continue to announce investments in India,” Mr Kent said, adding that the company’s focus would be on ‘continuing to be flexible, and work with more speed than ever before’.

     

    “Yes, there are some issues in the world economy. But it’s wrong for us to say that India, or China, or Brazil or any emerging market is slowing down. As you go up, the oxygen gets thinner. What’s being created today at 6-7 per cent GDP is incrementally much higher than it was some years back… what’s more important is sustainable growth and not growth that can’t be controlled, ” he added.

     

    The $3-billion investment is over and above the $2 billion, the maker of Thums Up cola and Kinley water had announced last November. The company has invested $2billion in India since 1993, when it-entered the country.

     

    Mr Kent said he expects India to be among its top 5 markets soon’, up from its current No 7 ranking. “This is a realistic goal. India’s demographic, economic and social trends are all huge drivers of growth. Six years ago, we were not strong here, not at all… but India has been a remarkable turnaround story,” he said.

     

    The CEO, who got a pay package of $21.2 million last year, up 10 per cent from the previous year, flew down in his private jet with close family and friends on what is his first India visit as Chairman on Monday night. During his three-day India stay, he is visiting the Taj Mahal in Agra, making a flying visit to Amritsar to meet a handful of key bottlers and attending a Coke Studio concert in Delhi. Thrown in between is a town hall meeting with Coca-Cola employees, a few market visits and a visit to the beverage giant’s headquarters in Gurgaon. Unlike rival PepsiCo’s Chennai-born global CEO and Chairman Indra Nooyi who’s a frequent visitor to India – a key growth bastion for both cola majors – Turkish American Kent had not visited India since he took over the corner office at Coca-Cola’s headquarters in Atlanta in 2008.

     

    Coca-Cola’s portfolio in India includes aerated drinks Coke, Thums Up, Fanta, Sprite and Limca, Kinley water and Minute Maid juices. Even after two decades of being here, the beverage maker’s top-selling drink here remains Thums Up, which it acquired from Ramesh Chauhan-owned Parle Bisleri.

     

    But Mr Kent said the choice depended on ‘the consumer’. “We remain “constructively discontent and we believe we are just getting started. We need to make sure we provide choices to consumers… responsible choices. And help create solutions for over-nutrition and under-nutrition,” he said.

     

    Like most food and beverage firms worldwide, Coca-Cola too is trying to transform itself as a ‘health and nutrition-focused company’. But over three-fourths of Coca-Cola’s revenues continue to come from sugary aerated drinks . “We let the consumer decide what he wants…. and we label our products responsibly.” said Mr Kent.

     

    Like its American rival PepsiCo, Coca-Cola too, has been depending on India for driving double digit growth. For fiscal 2011, for example, Coca-Cola said its global volume grew 5 per cent, aided by key emerging markets such as Latin America, India and China. A consistent growth performer, Coke’s India business has been growing for the last 23 quarters, of which 17 were in double digits.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Coca-Cola surprised pundits when it dropped the price for the 200 ml returnable glass bottle by Rs2 to Rs8

    Will Coke’s 200ml pack price cut cannibalise Thums Up?

    By Preethi Chamikutty

     

    Summer is still a few weeks away, but cola brands have already started feeling the heat. While most brands are closely guarding their marketing secrets for the season, Coca-Cola surprised pundits when it dropped the price for the 200 ml returnable glass bottle (RGB) by Rs2 to Rs8.

     

    That may not seem unusual – after all in the past, Coke has cut price. However, most of those reductions were across all brands in the portfolio, from flagship Thums Up and Sprite to Limca and Fanta. This time, however, the exercise applies only to Coca-Cola.

     

    Independent marketers are not convinced about the strategy as they feel that in the urge to close in on arch-rival Pepsi, Coke runs the risk of cannibalising Thums Up, its top cola brand and the country’s largest selling carbonated drink.

     

    So why is one of the world’s most valuable brands discounting itself in India? The official response from Coca-Cola is that the “special promotional price” will “fuel growth of the cola category. As the 200 ml pack is the entry point into the category, it will recruit new consumers into the cola segment since it is a very attractive price point,” said a company spokesperson.

     

    The promotional offer is being rolled out in phases across select markets; 70 per cent of markets will have the Rs8 price. Those familiar with the promotion say that this is a pilot project for three months, with an option to extend it.

     

    Clearly, Coke has trained its sights on Pepsi – which has yet to react to the price cut – and hopes to inch closer to it. Still, market observers wonder whether the drop in price is aimed at Pepsi or at Coke’s own brand, Thums Up, which is the leader in the cola category as well as in carbonated drinks.

     

    Latest market share figures are unavailable – both cola majors will not part with them – but those familiar with recent numbers point out that Thums Up has a share of roughly 42 per cent of the Rs4,000 crore pure cola market. Pepsi follows with 36 per cent, and Coca follows with a share of just under a fifth (a few regional brands account for the rest).

     

    An official at a beverage marketer says that Thums Up also leads the approximately Rs10,000 crore carbonated soft drinks market with a 15 per cent share. If marketers do not approve of Coke’s move, it’s with good reason. “Unless this is a global diktat, this strategy is flawed from Thums Up’s point of view,” reckoned Nobby Gupta, founder & CEO, Nobby Brand Architects.

     

    “In countries wherever Coke is present, it always has to be the market leader and all other brands have to follow; if that is the aim for India as well then this strategy falls in place,” he added. But he also goes on to say that this strategy will have a negative impact on the combined share of both Coke and Thums Up.

     

    Me Gupta’s logic is simple: Lowering the price of Coke will not put pressure on just Pepsi, it will also cannibalise the market share of Thums Up. “And if Pepsi drops price too, which is likely, there is a chance of it eating into both Coke and Thums Up,” added Mr Gupta.

     

    Then there are those who feel that dropping prices for short-term gain is dangerous. “Because when you go back to old prices consumers may well say: ‘Thank you very much for the discount, now I will go back to Thums Up,” said Anand Halve, co-founder of Chlorophyll Brand & Communications Consultancy. “Momentary bribing does not ensure long-term consumer loyalty,” he added.

     

    For a generation of Indians, Thums Up, with its relatively stronger taste, is synonymous with cola. “The preference for a strong cola continued even as new cola brands entered and are now expanding the category. Over all these years, Thums Up’s communication has remained consistent,” said Devendra Chawla, president, food & FMCG, Future Group, who is a former Coke associate.

     

    To be sure Thums Up has assumed almost cult brand status over the past two decades with commercials like ‘Taste The Thunder’ and ‘Toofani Thanda’ that had an international look and feel to them. Ashok Kurien, advertising guru and former chairman Publicis India, who was involved in the launch of Thums Up said: “Thums Up managed to crack the soul of Indian consumers through advertising and reached out at a deeper level. It was about struggles in life, the anxiety and determination to survive and succeed. This was probably the strongest concept in Indian advertising that connected to the young Indian male. And it still connects today.” When Coca-Cola acquired Thums Up, Kurien advised the Atlanta-headquartered company to only pit Coke against Pepsi and not touch Thums Up – as it already had an 85 per cent market share. “But Coke introduced both Coca-Cola and Thums Up in 300 ml bottle and people lapped up Thums Up, with Pepsi taking the second spot.”

     

    The battle between Coke and Pepsi continues, although Coke officials deny the attempt to spark off a cola war; they just want to step up per capita consumption by Indians, they say. “Indians consume only 12 200 ml bottles of beverages per year compared to 675 bottles by Mexicans – the highest consumers of Coca-Cola globally,” pointed out a Coke official.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved