Cola Giants’ Bot­tled-up Fears of Smaller Ri­vals Bub­ble Up

Cola ma­jors set up spe­cialised groups to track smaller re­gional brands that are steal­ing mar­ket share

The Economic Times - - Front Page - Ratna.Bhushan@ times­group.com

New Delhi: Coca-Cola and Pep­siCo, the world’s largest sell­ers of soft drinks, are view­ing the grow­ing pop­u­lar­ity of a slew of smaller re­gional brands in In­dia as a threat. For the first time, the cola multi­na­tion­als are set­ting up spe­cialised groups to track th­ese B-brands, which are steal­ing mar­ket share from them.

“The teams look­ing at th­ese brands are sep­a­rate from the ones track­ing ru­ral mar­kets or coun­ter­feits,” said a top of­fi­cial from one of the cola com­pa­nies.

There are at least 50 such fizzy drink brands that are sold in the coun­try with lit­tle spend­ing on mar­ket­ing. The re­gional drinks are about 20% cheaper than the global cola brands. From Bovonto in Tamil Nadu and Jayanti cola made by Jayanti Bev­er­ages in Al­war to Xalta Cola made by a New Delhi-based com­pany and Gu­jarat’s Ha­joori & Sons, which sells drinks branded Sosyo, Gin­lim and Le­mee, to City Cola sold by Delhi- based Rahul Bev­er­ages — the threat is omi­nous. Ac­cord­ing to in­dus­try data, the con­sol­i­dated mar­ket share of th­ese re­gional brands is 15-17%.

That’s a siz­able chunk of the or­gan­ised soft drink mar­ket, which is es­ti­mated at over .₹ 14,000 crore. Th­ese brands are rid­ing on al­most no mar­ket­ing spends and high trade mar­gins, with some of them sup­ply­ing their prod­ucts di­rectly to re­tail­ers.

A Coca-Cola spokesper­son said the com­pany was com­pe­ti­tion-aware but not com­pe­ti­tion-fo­cussed. “We stay in­formed of new prod­ucts, new brands and emerg­ing con­sumer pref­er­ences.”

“When there is a change in con­trol with or with­out trans­fer of shares and in the event of a change from a dual or mul­ti­ple con­trol to sole con­trol, open of­fer gets trig­gered un­der the takeover code,” said RS Loona, part­ner at Dhaval Vus­sonji Al­liance and for­mer ex­ec­u­tive di­rec­tor at Sebi.

When con­tacted, a Di­a­geo spokesper­son said: “It is clear that Di­a­geo has been in con­trol of USL since we started fully con­sol­i­dat­ing USL re­sults in July 2014. We are, there­fore, very clear that there was no change of con­trol in Fe­bru­ary 2016.”

In a re­lated de­vel­op­ment, Sebi said Di­a­geo Hold­ing Nether­lands had is­sued a $135-mil­lion bank guar­an­tee to Stan­dard Char­tered Bank on July 4, 2013, on the li­a­bil­i­ties of Wat­son, a com­pany af­fil­i­ated to Mallya. Wat­son de­faulted in May 2015. On Jan­uary 29, 2016, DHN paid $140.97 mil­lion to Stan­dard Char­tered Bank. On June16, 2016, Sebi asked Di­a­geo to make ad­di­tional pay­ments to mi­nor­ity share­hold­ers of USL as its ear­lier open of­fer price had not fac­tored in the bank guar­an­tee pro­vided to the com­pany af­fil­i­ated to Mallya.

ANIRBAN

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