‘The big growth is in small towns, which are neither rural nor metro’
NEW DELHI: With rapid urbanisation, Coca-Cola India sees a big opportunity for its products in small towns. With a clutch of new product launches, Venkatesh Kini, president of India and South West Asia for the soft drinks maker, spoke on the company’s expansion in the noncarbonated drinks category, goods and services tax (GST) and the problems it faced in Tamil Nadu. Edited excerpts from an interview: Which summer products have you launched? We just launched Aquarius, which is one of my favourite products in the portfolio. I do a lot of running. It’s great for replenishing. It’s actually a brand that originated in Spain and Japan and now sold in other parts of the world. We have also expanded Minute Maid in multiple flavours and introduced coconut water Zico. This is the first year when you have launched multiple products in the noncarbonated products segment. Is the consumer turning away from carbonated beverages? The pace of launch of beverages has increased. A lot of that has to do with the fact that the speed at which government approvals come now is faster. It used to take two years to get an approval for a product launch. Now it takes a few months. Do you expect revenue from noncarbonated drinks to exceed that from carbonated drinks? If that’s where consumer goes, we will be perfectly happy with it. If consumers vote with their wallets for products like Aquarius, then that is what we will sell and expand. And if they vote for juices, then we will sell that. So we are going to follow the consumers as opposed to saying that we want to sell one product or the other.
If there is a big role for carbonated drinks, then there is an equally big role, if not bigger, for non-carbonated drinks. Today, about 35-40% of our business is from noncarbonated portfolio.
Are you happy with the 15% cap on soft drinks in GST?
Goods and Services Tax (GST) is the best thing that could happen to the country in terms of reforms. As far the beverage industry is concerned, what we are looking forward to from the government is a taxation policy and GST which makes it a levelplaying field based on the content of the product. So the higher the sugar content, the higher the tax rate and vice versa. So, the cess of 15% on top of 28% will be applied to certain products.
Which market are you betting on urban or rural?
The big growth that we see is in small towns or the midtier markets, which are neither rural nor metro. Those towns are showing tremendous growth potential.