Coke's splash in local flavours

The beverage company is looking to increase its repertoire of foods by focusing on processing

Beverages maker Coca-Cola has announced at the just concluded World Food India event the launch of an initiative that will expand its Minute Maid portfolio with a number of region-specific juice variants that promise to bring familiar local flavours to the fore while empowering farmers. It also launched a frozen fruit dessert to mark its entry in India into the “Beverage Plus” category, as part of a global strategy to widen its products beyond carbonated drinks, while signing a pact with the ministry of food processing industries to invest $1.7 billion in the agri ecosystem over the next five years.

Asim Parekh, the vice-president of Coca-Cola India’s Fruit Circular Economy initiative, says after food security, achieving nutrition security ought to be the next target for the country. He adds the current scenario ensures a high tide in favour of companies. While a majority population is dependent on agriculture, their contribution to the GDP and per capita income are lower compared to other sectors. Parekh says in the last few years, within agriculture, horticulture output—which includes fruits—has overtaken that of foodgrain. Also, productivity of horticulture is greater per acre, but processing remains poor even compared to a BRICS nation like Brazil, he adds.

“As a country, there is an opportunity being created on the supply side. We are producing close to 90 million tons of fruits. About 20-25 per cent is turned into liquids. The packaged market is hardly around 20 per cent of the fruits consumed as liquid, so a huge headroom is available for all players to grow the market.”

Srideep Kesavan, director, marketing, juice category, Coca-Cola India, points out that the Coke journey of popularising local fruit flavour goes back to the four decades-old brand Maaza, which the multinational acquired in 1993. The mangoes for the drink are procured from Andhra Pradesh. An initiative started nearly a decade ago by the company, Project Unnati, has helped to increase farmers’ productivity.

Parekh explains that involved growing mangoes in ultra-high density (from a traditional 10x10 metre space which takes seven-eight years to yield results, to a 3x2 metre space). The trees are grown to only about six-seven feet height and the fruits are sown by the second year. Damage to the fruit is minimal as they are plucked by hand. Also, they introduced efficient water utilisation through drip irrigation. Parekh adds this technique of precision farming is explained to farmers through demonstration farms of about 1,000 acres. Besides, the company has a bus—that functions like a classroom—each in Andhra, Tamil Nadu and Karnataka to train farmers. “We are continuing this programme with our partners, Jain Irrigation. They are also our largest processor of mangoes,” says Parekh.

The new plan, titled “Fruits of India”, extends the scope of the Fruit Circular Economy initiative to include flavours such as guava from Allahabad, mangoes (dussehri from UP and kesar from Gujarat), orange and mosambi from Maharashtra, and litchi from Bihar. It will be accompanied by a marketing drive, “Ras ras mein India”.

While the company is looking to highlight local palates, on targeting consumers Kesavan says, “One of the segmentations that we do is on the aspect of mobility. India is mobile. Earlier it used to happen at the top level, but now up to rural migration is happening across the country. So there is a market for everything everywhere. Secondly, people want to experiment, which is why the campaign is celebrating diversity of India.” He is also clear that Coke is targeting the mass audience with the new juices, adding that by making claims of “Ras Ras Mein India”, the company is obliged to create the infrastructure, processing, procurement network, etc. at the back end.

According to the company, a growth dip in the carbonated soft drinks category is contestable, and it believes there still is room for every beverage category to grow in India, despite a turn for more health-conscious options among consumers. As Parekh says, “Coca-Cola will continue to grow but the company will grow faster, and that can happen only when you provide choices to customers.”

Experts believe expansion by big companies into fruit juices was due for a long time. Rajat Wahi, partner, management consulting at Deloitte India, says that with consumption of aerated drinks not growing as fast as earlier, it is a logical extension. “Local juices can be easily regionalised by a big company. An alternative category to aerated drinks such as fruit juices will only continue to grow.”