Coca Cola to invest $250 mn over 3 yrs

To turn around bottling operations by 2008.

Within days of acquiring energy drinks maker Glaceau, American giant Coca Cola today said it would invest $250 million in India over the next three years and turn its bottling operations in the country profitable by 2008.

"In bottling operations, the business will move into profitability next year. In one of the months in 2007, we broke even, but on a full-year basis, we are expecting to be in profit in 2008," Irial Finan, head of Coke's bottling operations worldwide, said.

He said most of the investment would stay within India as the required infrastructure such as coolers and trucks were being manufactured in India. Along with Coke's $250 million, franchisees of the company's bottling operations in India are also likely to invest between $50-100 million to ramp up infrastructure.

Of the 60 bottling plants in India, Coke owns 25, while 24 are owned by the franchisees and the remaining by the co-packers.

Finan said the company was also open to divesting its bottling business and moving towards more and more franchisees.

"This is a long-term policy of the company. There are, however, no immediate plans or any set timeframe to do so," Finan said, adding that the company was not contemplating divestment in bottling operations at least for the next 12 months.

On the pricing policy of charging Rs 5 for a bottle of 200 ml of Coke, which the company had initiated four years ago and withdrawn in no time, Finan candidly admitted that it was a "mistake".

Asked to elaborate on whether the policy was wrong or the execution, Finan said: "There was nothing wrong with the policy, but certainly it had to do with the execution."

After Coke initiated the campaign, most of the demand went into this category, causing imbalances.

"This was a mistake and it has been corrected. May be the integration of operations of the concentrate and bottling was the reason. These two have been separated and are now running successfully as anywhere else in the world," he added.

He, however, said the company was open to a dual pricing policy in India, with separate price range for rural consumers and another for urban areas.