Coca-Cola plans fizz at four new plants even as three lose theirs

Four new plants will be added to beverage maker Coca-Cola's list of factories in India even as operations at three units were suspended recently due to inadequate demand.

In a conversation with Business Standard, Venkatesh Kini, president, Coca-Cola India and Southwest Asia, said six new projects had been added in the past three years in India.

"The plants are not set up by us, but by our bottling partners. However, we remain committed to the Indian market," he said.

India is the sixth-largest market by sales for Coca-Cola, having overtaken Germany in 2014. The plan is to become the fifth-largest market in five years, something the firm had articulated in 2012, when $5 billion (Rs 30,000 crore) was committed in terms of investment in the country.

Of the 54 plants that now make Coca-Cola products - this number was 57 before the suspension of operations at three units - half are owned by the company's bottling arm, Hindustan Coca-Cola Beverages, and the rest by bottling partners and co-packers.

If the four new plants, whose locations have not been disclosed, are added, the total number of operational plants will be 58. The new plants would be set up in the next three years by the company's bottling partners, company executives said.

Kini said the option on resuming operations at the three non-functional plants remained open. It would be based on the demand situation, he added. "The six new projects were set up in different parts of the country to address production needs, both in juices and carbonated drinks. The new plants will also address production needs of our portfolio," he said.

Coca-Cola's total revenue, including company-owned as well as franchisee bottling operations, in India is around Rs 15,000 crore, of which a third comes from its non-carbonated drinks.

Kini admitted the preference for healthy beverage options was growing among Indian consumers, though fizzy drinks as a market still remained large in the country. "The base of cola drinks is still large, but yes, newer categories have been emerging," he said.

In the past six months alone, Coca-Cola has launched Fuze Tea, a fruit-flavoured tea drink, Vio, a flavoured milk, and now, Fanta, that has 10 per cent juice in it. This is an innovation following prime minister Narendra Modi's call to manufacturers to add at least two per cent juice in carbonated drinks to help the cause of farmers.

Modi had first mentioned this in 2014, and he repeated it last month during the Start-up Summit in New Delhi.

Kinny said the company had put in almost a year's work to develop a formulation that was compatible with Indian conditions and that matched Indian taste profiles as far as 'juice in fizz' was concerned. "We will look at launching more fruit flavours under Fanta with the 10 per cent juice formulation. Mango drinks are the largest as a category, so we began with green mango, but there are possibilities for many more," he said.

The company is also expected to stitch up more partnerships for local sourcing as its portfolio of products expands. It sources mango pulp from the Jalgaon-based Jain Irrigation and the Mumbai-based Foods & Inns respectively.

A small quantity of guava and litchi pulp is also sourced from local processors.