Coca Cola plans to make India its third largest market

With increasing per capita income, the demand for packaged beverages is growing exponentially in India. The per capita consumption of soft drinks in India is around 5 percent that of the US, indicating the strong growth potential.

The Coca-Cola Company is looking to tap into this growth, and the company is focusing on making India its third largest market (though without a definitive time frame), up from its current sixth position.

Diversification into a wide variety of beverages is one of the key focus areas for Coca-Cola to drive this growth in India. While carbonated soft drinks currently account for nearly half of the Indian soft drink market, fruit and dairy-based beverages are growing at a faster pace.

Between 2010-2015 the CSD segment in India grew at a CAGR (compounded annual growth rate) of around 13 percent compared to nearly 28 percent for juices.

Health conscious customers and local flavors being introduced by juice manufacturers are among the key drivers for this growth. Coca-Cola plans to invest around $5 billion in India by 2020 and increase its portfolio of non-aerated drinks to attract health conscious customers.

Currently around 70 percent of the company’s portfolio is comprised of aerated beverages, and by introducing more fruit and dairy based drinks, Coca-Cola plans to bring this number down to 50 percent.

Further, innovation around local flavours is another strategy the company is likely to adopt to grow sales. In December last year, the company launched a lemon flavoured non-carbonated beverage called “Aquarius” in India, under its “active hydration” category targeted towards younger consumers who lead active lifestyles.

Prior to this, the company had launched Vio, a flavoured milk beverage in the country. In order to target the beverage sector in tier 2 and tier 3 markets in the country, the company launched “Kinley Flavours,” a range of aerated drinks which is likely around 35-40 percent cheaper than its existing range of Coke, Sprite, and Fanta brands.

Further, this brand is available in some locally popular flavours. This is an attempt to break into the lower-priced segment which is currently dominated by local brands, which now command nearly 12 percent of India’s packaged aerated beverages market.

India is a fast-growing market and holds strong growth potential for Coca-Cola. After seeing dwindling sales growth in the region, it appears that the company is emphasising driving growth in India.

The key point appears to be expanding Coca-Cola’s portfolio of beverages in the country, and this strategy may prove to be a winner. – FORBES.