Harsh summer draws fizz out of Coca-Cola, sales up 3%

The country's largest beverage maker, Coca-Cola India's sales grew three per cent by volume during the crucial April-June quarter. While its sales have been in the positive zone this season, after last year it had to cut production by mid-single digits during the summer months.

Sales growth this year remained below that of juices and non-aerated drink categories, which grew a little more than 10 per cent.

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Sales of cold beverages jump significantly during the April-June quarter, as the day temperature goes above 36 degrees Celsius in most parts of India. The period usually accounts for 35-70 per cent of total yearly sales for manufacturers.

However, as summer set in early this year, during February in the south and west, the sale of these drinks surged even before the June quarter. Coca-Cola India posted double-digit volume growth during January-March 2016.

According to Prashant Mehra, partner at accountants Grant Thornton, there is a trend of consumers moving away from fizzy colas. "It's a slow cultural change. People in Tier-I cities are preferring non-aerated drinks, a category which Dabur and PepsiCo dominate," he said.

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This year, Coca-Cola launched a milk-based offering, VIO, to expand its non-fizzy drinks portfolio, apart from coming up with 180 ml cans to increase consumption.

"Our investment plans are on track. Earlier in the year, we announced our ambition to make Maaza, the first billion-dollar juice brand out of India, which demonstrates the potential and optimism around our business in the country. We remain very positive about the business opportunity that exists in India," a Coca-Cola India spokesperson said.

According to Mehra, non-cola brands such as Mountain Dew from PepsiCo are new hits among younger consumers in suburban areas. "That brand has seen significant uptick in Tier-II towns of late," he said.

Unlike major rival PepsiCo which has Pepsi in its kitty, Coca-Cola has two cola-based drinks in this country, Thums Up and Coca-Cola.

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Last year, the sale of aerated drinks fell on a year-on-year basis, as unseasonal rain interrupted long spells of heat wave. Coca-Cola India had increased the prices of its fizzy drinks by up to 20 per cent, due to higher prices of sugar and additional excise duty. This year, however, the summer was harsh and sale of consumer goods such as air-conditioners, refrigerators, coolers and ice creams grew by at least 25 per cent.