Coca-Cola India's volume growth in the second quarter slowed partly because of an increase in prices and also due to a mild summer.To address this issue, the beverage major is focusing on changing consumption patterns to ensure it hedges risks from the vagaries of weather and seasonality of the business.
Atul Singh, the India and South West Asia president and CEO, shares his new challenges Surajeet Das Gupta and Priyanka Singh and his bid to build products to address the market at the bottom of the pyramid.
Edited excerpts:
Your volume this quarter grew by just eight per cent as against 22 per cent in the previous year's quarter, whereas the growth figure in China is 21 per cent and Mexico 10 per cent. When the per capita consumption is still low in India, does this low volume growth worry you?
If you look at our growth, we have had 20 consecutive quarters of growth. However, we had taken pricing up for some of our products last quarter.
For instance, the 300-ml price went up by 20 per cent from Rs. 10 to 12. When we take pricing up in our industry, it takes some quarters for volumes to stabilise.
Plus, we had a lot of rains this quarter versus the same period last year. During the second quarter, which is the warmest, there is an increased consumption of glass bottles outside home. When it is raining, the outside consumption dips, which impacts our sales.
This means the correction in pricing has made a substantial impact on your sales. How will you deal with this situation, as pricing pressure will continue to happen in the country as raw material costs go up?
We do analyses of our products. Certain packs get impacted while others remain less affected. So, within our portfolio we have several packs that have grown substantially. We have multiple packs which we can price differently in different channels.
But eventually your volume growth has slowed down?
If the weather hadn't been the way it is, we would have not seen such slow growth. We have very high seasonality in India.
The temperature and precipitation impact on the sales in very high in seasonal markets like India. But this is changing.
Our growth rates in other quarters are higher because the consumer might be having it indoors even when it is raining outside. Small price increases don't have that much of impact; larger increase impacts sales.
So, what you mean is that despite all the marketing efforts and investments, the weather and monsoon determine your revenues. After all, these three months constitute 30-40 per cent of your sales.
The sales in this quarter constitute less than 30 per
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