New Coca-Cola India head Sanket Ray has a task cut out for him

By the turn of the year, Sanket Ray, the chief operating officer of Coca-Cola China, will occupy the corner cabin at Coke’s office located in the swanky One Horizon Center in Gurugram. 

Ray, who is in his late-40s, will be one of the youngest presidents of the entity in recent times, when he takes over from T Krishnakumar (KK), president of Coca-Cola’s India and South­west Asia unit, on January 1, 2021.

Ray’s elevation comes with both big challenges and opportunities. Unlike his predecessor, Ray will head a unit that is strategically more important to the parent company and will report directly to top executives at the firm’s headquarters in Atlanta, USA. As the cola major restructures global operations by removing reporting layers between the operating unit head and the top management, he will get direct access to Coke’s Chief Executive Officer James Quincey.

The structural changes highlight the growing importance of the unit — as it now finds itself on a par with the firm’s other key units like those in North America, Europe, and Greater China.  However, this also brings in challenges for Ray. The unit’s growing stature means expectations will be high, in terms of top line performance and larger volume offtake. But with the Covid-19 pandemic shattering India’s economy, resulting in mass lay-offs and salary cuts, the cola major is seeing sales falter amid an overall slowdown in consumption.

Coke’s operations took a significant hit in the April-June quarter because of the nationwide lockdown. Disruption in the local market impacted global volume offtake and its key sparkling beverages business.

The India business, third-largest in Asia and fifth-largest globally for Coke, has been the key growth driver in the past two years. However, bringing it back onto the growth path won’t be an easy task. The current slowdown is now estimated to spill over into the second half of 2021. And if Coke’s track record in the past decade is anything to go by, it has shown how difficult it is to quickly turn things around when faced with declining volumes.

Between 2013 and 2017, Coke suffered from faltering volume uptake. In-house bottler Hindustan Coca-Cola Beverages (HCCB) suffered a 4.3 per cent drop in revenue in FY18 and its bottom line remained in the red in FY17 and FY18. In FY19, growth came at the cost of divestment of key bottling operations in north India.

The global management seems to have reposed faith in KK’s growth strategy. People familiar with the developments say Ray’s selection for the top job is the endorsement. Much like KK, Ray is a HCCB veteran and was handpicked and groomed by the former, they say. “Sanket’s elevation clearly means a smooth transition at the unit. He was not only mentored by KK, but they also share similar business vision and managerial traits,” said a person who has worked with both.

Unlike some of its previous executives, Ray’s exposure in multiple roles in the system is his biggest asset, said another person. By navigating the narrow lanes of congested neighbourhoods in search of potential retailing points or finalising the optimum pack size and price for products, he is at ease in dealing with both white and blue collar workers, said a Coca-Cola veteran. The transformation that KK set in motion — making Coca-Cola a total beverages company from just a cola maker — is now expected to be accelerated. Since KK took charge in mid-2017, it has launched over a dozen products across categories and taken the country’s most popular brand ThumsUp to international markets. With a larger number of consumers shying away from sugary aerated drinks, Coke focused on expanding its non-cola portfolio. Since then, it ventured into value-added dairy, coconut water, relaunched Rim Zim, premiumised Maaza and revamped the fruit juices range under Minute Maid.

As a result, revenue share from the non-aerated portfolio grew to about 40 per cent from 30 per cent in 2016 and Coke crossed the billion-servings-a-year milestone in India. “During KK’s tenure, bottlers and employees were given the courage to strive for growth,” said a person cited above.

With his protégé in charge, KK will move out of daily operations after spending over two decades at the firm. As chairman of Coca-Cola India, his role will involve providing strategic vision and building bridges with key clients and stakeholders. With the global parent focusing on scaling new products, the operating structure of the unit is expected to get leaner.

For KK, however, the end of his stint could not have been better. After taking charge at a time when Coke was posting decline in volume uptake in consecutive quarters in 2018 and 2019, it has grown sales steadily.