In a landscape where some consumer goods companies grapple with sluggish rural demand, Coca-Cola India stands out, experiencing faster growth in rural markets compared to urban counterparts. The expansion of electrification coverage in rural India, improved incomes, and increased government spending have propelled the beverage giant's growth in these regions, reaching approximately 3.2 lakh out of an estimated 6.6 lakh villages across the country.
The adoption of Unified Payments Interface (UPI) in rural areas has also played a pivotal role, facilitating small-ticket payments for consumers. The infrastructure support that the government has built in terms of electrification and UPI has helped drive rural growth. Also, digital penetration has added to consumer awareness and it is a big booster. Rural, for us, is definitely growing 3% faster than urban today," Sundeep Bajoria, VP, India operations at Coca-Cola India told TOI.
Despite inflation posing a challenge for companies, Bajoria acknowledges its reality and emphasizes the importance of devising the right pricing strategy.Coca-Cola India aims to ensure that its products are appropriately priced for different consumption occasions, with particular attention to key price points such as Rs 10, 20, and 50, which hold greater significance in rural regions.
Bajoria notes that beyond the traditional summer season, festivals have become another significant occasion for beverage consumption. Coca-Cola India has strategically marketed festivals, creating a second season for increased consumer engagement. The brand's association with the ongoing ICC Men's Cricket World Cup, as part of its broader partnership with the International Cricket Council (ICC), has reinforced the concept of this extended beverage consumption season.
Spending the big bucks
Coca-Cola, facing challenges from unseasonal rains earlier in the year, bet on a robust festive season and plans to undertake its most substantial brand spending ever in India during the second half of 2023.
Arnab Roy, Vice President of Marketing for Coca-Cola India and South-West Asia, exuded positivity regarding the company's performance in the latter half of the year based on trends observed in Q3 and the beginning of Q4. Roy highlighted that investment during the World Cup and the festive season would mark one of the largest ever in Q3 and Q4 combined in the history of Coca-Cola's operations in India. The investment will be a collaborative effort between Coca-Cola and its bottling arm, Hindustan Coca-Cola Beverages.
In terms of ad spends, Roy noted, "Ad spends in the December quarter as a percentage of overall spending are 5-7 per cent higher compared to a year ago." The company is focusing on activating its brands, including Thums Up, Limca Sportz, and Sprite, leveraging the ICC World Cup platform.
3 billion and counting
In the company's global earnings statement in March, Coca-Cola chairman James Quincey called out India’s economy as “resilient with a strong job market and robust consumption.” Quincey said affordability, driven by single-serve and at-home entry packs, helped in driving approximately 3 billion transactions in India.
The company attributed growth of its India business to higher number of retailers, investments made in cold-drink equipment and pricing. It said it increased household penetration through targeted promotions on large packages for the at-home channel, adding that “in close alignment with its bottling partners, it continues to raise the bar in India in integrated execution.”
Within the Asia-Pacific region, Coca-Cola said its unit case volumes grew 10 per cent led by China, India and Australia.
On its company-owned bottling network, Coca-Cola said, “Unit case volume declined 1 per cent, primarily driven by the impact of refranchising bottling operations, partially offset by strong growth in India.”
The way forward
Looking ahead, while expanding rural coverage remains a primary focus for Coca-Cola India, the brand also aims to tap into urban markets to drive premiumization. Bajoria sees urban markets as an opportunity for building premium offerings, considering the ample room for growth.
Currently, Coca-Cola India reaches around 41% of urban households and 32% of rural households, showcasing significant potential for further expansion. With 4.5 million stores in India, the company sees itself at a strategic juncture, leveraging the increasing per capita incomes that have crossed the $2,000 threshold.
https://economictimes.indiatimes.com/industry/cons-products/food/coca-cola-cracks-the-most-elusive-market-in-india-the-countrys-hinterlands/articleshow/105199454.cms
Comments