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Fizz is back: December quarter puts Pepsi, Coke on the recovery path

New launches of beverages expected ahead of summer

Topics
Pepsi | Coca Cola | Q3 results

Viveat Susan Pinto  |  Mumbai 

Coca-Cola
Coca-Cola said there was “solid growth” in volume sales of its soft drinks in India and China in the quarter under review

The October-December 2020 period has brought relief to cola majors Coke and in India after months of reeling from the impact of Covid-19 pandemic.

Management commentary from global investor calls of the two during the week indicates that beverage sales rebounded in the December quarter, aided by the festive season and easing of lockdown restrictions.

The Coca-Cola Company, based in Atlanta, and PepsiCo Inc, headquartered in Purc­hase, New York, follow a January-December accounting year.

Coca-Cola said there was “solid growth” in volume sales of its soft drinks in India and China in the quarter under review, while PepsiCo said it had recorded “high single-digit” revenue growth in India, led by beverages, during the period.

The two are expected to build on the momentum by lining up new beverage launches ahead of the summer season this year. PepsiCo made the first move, announcing it was launching its global brand, Mountain Dew Ice, in India, in the coming weeks. “Our fourth quarter international results featured double-digit organic revenue growth in Brazil, high-single digit revenue growth in China, India, Australia, and Germ­any, and mid-single digit revenue growth in the UK and Russia,” Ramon Laguarta, chairman and chief executive officer (CEO), PepsiCo, said. “Within beverages, we gained share in China, India, the UK, Germany, Egypt, and Thailand,” he said.

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Laguarta wasn’t the only CEO to be pointing to a recovery in beverage sales in India. His rival James Quincey, chairman and CEO of The Coca-Cola Company, had a similar point to make.

“In India, despite challenges, at-home trends were strong, and we saw signs of recovery in away-from-home channels through the holidays,” Quincey said.

The Coca-Cola India management had earlier indicated that its investment plans were on track despite Covid-19-led disruptions and that it was accelerating the pace of launches in non-carbonated drinks as health becomes a top priority for consumers due to the pandemic.

While fizzy drinks remain key to Coca-Cola’s India operations, analysts estimate a third of its business in the country now comes from non-fizzy drinks. In recent years, the company has been working on a farm-to-fork ecosystem, ensuring a steady supply of local fruits for its juice business. India is already Coca-Cola’s fifth-largest market by volume, which it is looking to double in five years.

PepsiCo, on the other hand, has a strong foods business in addition to beverages. While the foods business has been a growth driver for the company in recent years, the December 2020 quarter has seen the beverage segment do well, analysts tracking the company said.

Both Coke and have responded to the in-home consumption trend by launching small and family packs of its popular beverage brands. The opening up of the retail market has seen the two re-energise their trade network, offering promotional schemes to offline grocery channels, stepping up focus on online platforms, and pushing aggressively into the hotel and restaurant segment, which have reopened across the country.

The two companies are also expected to push local-level innovations to drive sales in the future. PepsiCo said Mountain Dew Ice was being launched in a “cloudy lemon format”, especially for the India market, and was backed by significant investment and consumer research by the company.

Coca-Cola, meanwhile, was making available its drinks at affordable price points. For instance, Rimzhim, its masala soda, and Aquarius Glucocharge, a fortified vitamin drink, were available for Rs 10 a unit, while Apple Pops under the Minute Maid umbrella was available for Rs 15 a unit.

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First Published: Fri, February 12 2021. 23:06 IST
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