Coca-Cola to invest $2 bn in India over five years

The Coca-Cola Company on Monday announced it would invest $2 billion (nearly Rs 10,000 crore) along with its franchisee bottlers in India over five years. That, it said, would catapult the country to its sixth largest market in the world in terms of volumes.

In the 18 years since its India re-entry in 1993, the company has invested a little more than $2 billion. It now plans to put in the same amount through internal accruals, debt as well as fresh infusion of equity capital through foreign direct investment in just five years.

Currently, India is the ninth largest market for Coke in terms of volumes across the globe. The company plans to invest $30 billion across the world in the next five years. India will account for 6.6 per cent of that.

Talking about the substantial investment plan for India, Ahmet C Bozer, president of The Coca-Cola Company for Eurasia and Africa who oversees 90-plus countries, said at a press conference, “We are making one of the most substantial investments for us in India, because we feel the market has now reached that level and scale. It has reached that threshold. If more money needs to be invested, as we have done earlier in India, we will do that, too.”

The fresh investment will be used to meet some ambitious targets for the company. It expects to double the number of outlets where Coke brands are available from 1.5 million now to three million in five years. The second, and more ambitious, target internally is to double its volumes in the country. The Indian market overtook South Africa in volumes last year.

Atul Singh, president and CEO of Coca-Cola in India and Southwest Asia, said the money would be invested in various key areas. “We will use it to expand our bottling plants, set up more plants (it already has 50 units), build cold-storage assets, expand our rural and urban distribution and our trucking strength,” said Singh.

Underlying the importance of India, Bozer said, “By 2020, as much as 50 per cent of the middle class around the globe will reside in Eurasia and Africa, so we have a favourable demography in this region. And, about 90 per cent of that will be in India and sub-Saharan Africa.”

Singh said the potential of the Indian market for beverages had been barely tapped. “The per capita consumption of soft drinks for our company in India is 11 compared to the global average of 89. In an emerging market like Mexico, it is a staggering 675. Even in China, it is 35. So, we have just scratched the surface,” said Singh.

Coca-Cola has shown reasonable volume growth in India despite a slowdown in the industry. In the third quarter of this calendar year, its India volumes grew 19 per cent over the same period last year.