Coca-Cola has moved out of bottling operations in north India. The company announced on Wednesday Hindustan Coca-Cola Beverages (HCCB), the groups’ local bottling arm, would transfer its business operations in four territories in north India to the existing bottlers.
This means, Coca-Cola group will no longer bottle and market any of its beverages in the country. As a part of this transition, HCCB will divest three of its existing plants in the region — one each in Ghaziabad (UP), Varanasi (UP), and Jammu (J&K).
While the bottling company currently has 18 plants, after the transfer it will be left with 15 plants in the southern, western, and eastern parts of the country.
According to a Coca-Cola India spokesperson, the company is on course to build a stronger and more sustainable local business in India. “This move will deliver sustainable growth and will create shared value for bottlers, customers, consumers, and communities. This realignment optimizes existing capacities, supply chain, brings further investments, and improves distribution routes through contiguous territories.”
The firm is not planning to divest anymore plants, the spokesperson said.
Coke’s move follows PepsiCo’s divestment of bottling assets to its key franchise partners like Varun Beverages in the past five years. Unlike Coke, PepsiCo does not bottle any of its beverages in India now. While both have refrained from relating any of these moves to their respective profitability, experts said, the exiting bottling operations were directly related to improving bottom lines. Being a low margin business, bottling and marketing of beverages usually put strain on firm’s margins.