Hindustan Coca-Cola beat slowdown by double-digit growth

Hindustan Coca-Cola Beverages (HCCB) beat the continued slowdown in consumer spending in 2014-15 by managing to increase its sales by 14 per cent.

During the year, HCCB's operating revenue grew to Rs 7,859 crore from Rs 6,898 crore last year - at a much higher rate than a growth of 4.8 per cent in 2013-14, its lowest rate since 2009-10.

According to latest data available with the Registrar of Companies (RoC), HCCB posted Rs 241 crore net profit in 2014-15, 23 per cent higher than Rs 196 crore in the prior year. Its net sales rose 16.7 per cent to Rs 8,897 crore in 2014-15 from Rs 7,627 crore in the prior year. The company's sales was bolstered by 11 perccent rise in volume. It also took a five per cent in 2014. Analysts tracking the company say profitability improved on the back of these price hikes in 1.25 litre and 2-litre packs.

UNCORKING TURNAROUND

• Operating revenue grew double digit, helped by 5% price hike in FY15
• Volume sales grew 11% in 2014 (which covers 3 of the 4 quarters of FY15) due to better penetration
• Despite decline in buying of smaller packs, sales of larger value-saving packs of 1.25 litres and 2 litres increased significantly
• Focus on better penetration and higher per-capita consumption helped the company beat slowdown in consumer sentiment

HCCB operates nearly 24 production units across India. The company produces for and sells Coca-Cola products in nearly two-thirds of the markets in India. According to its filing with the Registrar of Companies, Coca-Cola India has managed to grow 22 per cent to Rs 1,818 crore in 2014-15 from Rs 1,492 crore in the previous year.

Of late, the Atlanta-headquartered beverages major is increasing its focus on premiumisation of its portfolio in India. It introduced Coke Zero, a sugar-free cola drink that tastes similar to the company's flagship brand Coca-Cola. It is also working on a separate channel for distribution of its premium products like Schweppes in the country.

Venkatesh Kini, president of Coca-Cola India and South West Asia, told Business Standard a few months earlier about the company's interests in turning the country into an innovation hub and gradually introducing more premium products in India.

A slowdown in the cola sector has been under way for three years, leading to lower volume and sales growth for all major players in India. Since news related to the risks involved with regular consumption of sugary drinks spread, and with India featuring among the top nations with a significant population suffering from diabetes and heart diseases, cola sales have suffered in the country.

Coca-Cola in India had to undertake its first production cut in a decade during the summer of 2015 due to a demand slowdown.