Coca-Cola to have channel to distribute premium brands

Deepak Jolly epected to innovate a new model in its franchise bottling territory

Coca-Cola India will put in place a separate channel for distribution of its premium portfolio of beverages. The company has appointed Deepak Jolly to innovate a new model in its franchise bottling territory and he would take over on November 1. The move is significant, as it will allow Coca-Cola to give adequate focus on its premium beverages.

The only other example of a company hiving off distribution of premium products into a separate channel is automobile manufacturer Maruti Suzuki. Last month, it decided to launch Nexa showrooms to sell its premium hatchback model - S-Cross. While Maruti currently sells only the S-Cross through these stores, it plans to add Ciaz and YRA soon.

However, a separate distribution model is still unprecedented in India's beverages industry.

While this portfolio is currently small consisting of Schweppes Tonic, Schweppes Gingerale, Schweppes Soda and soon to be launched Fuze Tea, division of the distribution model will mean the company will not mix its mass market cola drinks with its premium portfolio.

Schweppes, a flavoured refresher, was launched in India in 1999 after Coca-Cola took over the brand from Cadbury Schweppes.

The company did not indicate whether they plan to beef up its premium portfolio, however, persons in the know say it is likely to introduce some premium international brands.

"Of late, we are witnessing the market for niche and premium products mature," a Coca-Cola India official commented on conditions of anonymity. "As markets mature worldwide, we have introduced niche and premium products, which have a limited customer base and, thus, they need to be distributed differently than the mass products," the official added.

The Rs 15,000-crore company has 57 bottling plants. Bottling Investment Group (BIG), the beverages major's fully-owned bottling subsidiary, owns 24 units apart from 24 franchise bottlers, who like the BIG plants, can distribute and sell its products.

The project has been assigned to Jolly to "try and innovate" an optimum distribution model. Coca-Cola currently sells Schweppes in clubs, bars, beverage cafes and recreation centres in India. Although, the sale of drinks such as Schweppes is marginal in the country, the segment is growing at 15 per cent annually.

An official in the company says, Jolly, who joined Coca-Cola in 2005, played a key role in "re-establishing Coca-Cola's image in India" after the crisis in 2006 related to presence of pesticides in soft drinks.