‘CocaCola not looking at straight price increases’

MUMBAI: On Monday, Coca-Cola India announced an investment of $1.7 billion to grow its fruit and beverage portfolio and the entire ecosystem (from farm to table) over the next five years, starting January 2017.

Earlier in 2014, the company had committed to invest $5 billion by 2020. This investment is over and above that, says T “KK” Krishnakumar, president of India and Southwest Asia operations at the company.

KK, who recently took over the role, was previously CEO of Hindustan Coca-Cola Beverages Pvt. Ltd, the company-owned bottler.

In an interview, KK also spoke about the coming implementation of the goods and service tax (GST) and getting back to growth after a year of tepid performance, which led to a top management shake-up less than a quarter ago.

Edited excerpts:

Still, or noncarbonated, beverages such as fruitbased drinks contribute about 3540% of your overall revenue in India. Does this $1.7 billion investment signify a larger trend of moving away from carbonated drinks?

For us, carbonated is growing. From our side, we will have a broad portfolio which will include every category that evolves based on consumer trends.

How the mix evolves will be dependent on the consumer and what he picks up. We have sparkling, active hydration, we have made a foray into iced tea and dairy. We have already expanded our Minute Maid juice range from one variant in 2007 to 11 variants in 2017.

What will this $1.7 billion be used for?

Our business is now all about scaling up what we have been doing in the past 18-24 months, and we will also keep pushing more innovations.

Of the $1.7 billion, we will use $800 million to procure fruit-based ingredients and $900 million in infrastructure building.

With GST coming in, do you feel that it could be tough to get back to the doubledigit kind of growth rates?

Let me dwell on this for two minutes. Are we disappointed? Yes, a bit in terms of the rate. The rate on sparkling is more than what we anticipated. We were of the view that it would be of the same rate what it is now.

Also, the higher taxation on non-aerated sweetened beverages came as a surprise. But having said that, we are prepared to work and try to see what we should do to hurdle the GST rates.

Are you looking at price increases?

We don’t plan straight price increases. Our model is very complex. We use back-price architecture to give better price realiSation.